On Thursday, Stifel, a financial services firm, increased its price target for shares of International Flavors & Fragrances (NYSE:IFF) to $121.00, up from the previous target of $115.00. The firm continues to recommend a Buy rating for the stock.
The Stifel analyst expressed confidence in the company's financial outlook, suggesting that the sales and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) guidance for 2024 might be understated. As a result, the analyst has adjusted the 2024-2025 estimates slightly higher than the consensus.
The new price target is based on a 15 times multiple of the forecasted 2026 adjusted EBITDA, which reflects an anticipation of more stable business fundamentals for International Flavors & Fragrances. This stability is expected to help close the current valuation disparity when compared to its European counterparts in the flavor and fragrance industry.
The analyst also noted that IFF is well-positioned to benefit from improving global volume trends, driven by consumer packaged goods (CPG) companies and gains in private label and local/regional businesses.
International Flavors & Fragrances is seen as a neutral player that benefits regardless of the customer base, with sales and profit remaining largely consistent. This aspect is particularly attractive as it suggests resilience and adaptability in varying market conditions.
Looking ahead, the analyst anticipates that International Flavors & Fragrances will reveal new long-term targets around the time of its planned Pharma division divestiture in 2025. These targets are expected to demonstrate the company's ability to achieve mid-single-digit sales growth and an adjusted EBITDA margin of at least the low-20s, compared to an estimated 19.5% in 2024.
The analyst projects this would lead to high single-digit adjusted EBITDA growth over a two to three-year period.
In other recent news, International Flavors & Fragrances (IFF) has seen a wave of analyst activity. Oppenheimer has raised its price target on the company's stock to $117, maintaining an Outperform rating, suggesting robust fundamentals and potential for outperformance of second-half 2024 estimates.
Mizuho also upgraded IFF from Neutral to Outperform, setting a new price target of $120, attributing the change to a rebound in consumer goods. However, Morgan Stanley downgraded IFF's stock from Overweight to Equal-weight, citing the stock nearing the firm's set price target.
Jefferies has maintained a Buy rating and increased IFF's price target, reflecting positive near-term trends for the company.
These recent developments suggest a generally positive outlook for IFF among analysts.
InvestingPro Insights
InvestingPro data and tips provide additional context to Stifel's optimistic outlook on International Flavors & Fragrances (IFF). The company's market cap stands at $26.58 billion, reflecting its significant presence in the industry. Despite the analyst's positive projections, it's worth noting that IFF's revenue growth has been negative, with a -4.65% decline in the last twelve months as of Q2 2024. However, this aligns with the analyst's expectation of potential understatement in the company's 2024 guidance.
InvestingPro Tips highlight IFF's strong dividend history, having raised its dividend for 21 consecutive years and maintained payments for 54 years. This consistent dividend policy supports the analyst's view of IFF as a stable investment. Additionally, the tip indicating that net income is expected to grow this year corroborates Stifel's optimistic earnings outlook.
The company's total return of 60.93% over the past year and its current trading near its 52-week high (97.36% of the high) reflect the market's positive sentiment, which is in line with Stifel's bullish stance. These insights, along with 11 additional tips available on InvestingPro, provide a comprehensive view of IFF's financial health and market position.
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