UBS maintains IFF stock Neutral rating, $83 target

On Monday, UBS analyst Joshua Spector maintained a Neutral rating for International Flavors & Fragrances (NYSE:IFF) with a steady price target of $83.00. Spector’s assessment highlights the company’s recent completion of its Pharma divestment, which has effectively reduced its net debt-to-EBITDA ratio from approximately 4x in 2024 to a projected 2.8x in 2025.

The UBS analyst pointed out that the key issue for IFF now shifts from leverage to growth. With a current market cap of $19.8 billion and revenue of $11.4 billion in the last twelve months, IFF shows mixed signals. InvestingPro analysis indicates the company’s Financial Health score is "FAIR" at 2.3 out of 5. Amidst discussions about market dynamics, such as consumer spending trends and the impact of GLP-1s, Spector also addressed IFF’s performance compared to its peers. Notably, IFF has recently separated its Food Ingredients business from its Taste segment, allowing for more nuanced analysis.

Spector concluded that IFF is unlikely to achieve growth above its peers with its current portfolio, citing the Food Ingredients division as a limiting factor on both margins and growth. Consequently, he suggests that IFF should be valued at a discount relative to its peers due to this anticipated lower growth trajectory.

While IFF has shown stronger recent growth in its Taste and Scent segments compared to competitors, its Health/Bio segment, which includes enzymes and probiotics, has not performed as well. Spector’s neutral stance is maintained as he seeks further clarity on IFF’s comparative performance and market growth. The report delves into the data available and explores potential portfolio strategies for IFF moving forward.

In other recent news, International Flavors & Fragrances has reported several key developments that may interest investors. The company recently completed the sale of its nitrocellulose business to Czechoslovak Group, a move aimed at reducing debt and focusing on core areas like flavors, fragrances, and biosciences. This divestiture aligns with IFF’s strategy to enhance its leadership in sustainable innovations. On the financial front, the company demonstrated strong first-quarter performance, with organic growth of 3%, meeting BofA Securities’ forecasts. BofA Securities has subsequently raised its price target for IFF to $92, maintaining a Buy rating due to the company’s robust earnings and growth projections.

Tigress Financial Partners also initiated coverage with a Buy rating, highlighting IFF’s strategic investments and product portfolio as growth drivers. Meanwhile, Oppenheimer has maintained its Outperform rating with an $89 price target, citing the company’s successful reinvestment in growth and debt reduction. Barclays (LON:BARC) upgraded IFF’s stock rating to Overweight, raising the price target to $84, based on the company’s reduced financial risk and reliable 2025 financial guidance. These analyst actions reflect a positive outlook on IFF’s market position and strategic direction amidst economic challenges.

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