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Investing.com -- BofA Securities has upgraded Givaudan to a “buy” from “neutral” rating, raising its price objective to CHF4,800 from CHF4,500, in a note dated Wednesday.
The ADR target was also lifted from $107 to $117. The upgrade is based on what analysts describe as Givaudan’s consistent outperformance in the fragrance sector, particularly in contrast to DSM-Firmenich, which was simultaneously downgraded to “underperform.”
According to BofA, Givaudan delivered 22% cumulative organic revenue growth in its fragrance business over 2023–24, compared to 8% for DSM-Firmenich.
Givaudan also outpaced peers in Q1 2025, with its fragrance segment growing 16.7% organically. Consumer products, which account for 80% of fragrance demand, rose 7.9% in the latest quarter.
The brokerage attributes this to reformulation trends and category extensions, such as the rise of scent boosters, which have increased fragrance content per laundry wash by 3–5x.
This trend has added an estimated 30–40 basis points annually to overall fragrance demand.
Fine fragrance has also contributed to Givaudan’s growth, driven by product launches and greater fragrance dosage.
Cumulative growth in this segment was 33% for Givaudan from Q1 2023 to Q1 2025. The company’s active cosmetics division, which grew 7.7% in Q1 2025, further supported performance.
In contrast, DSM-Firmenich has struggled since its 2023 merger, impacted by execution issues, leadership changes, and larger exposure to lower-margin aroma ingredients. BofA noted DSM-Firmenich’s fragrance margins at 22.1%, trailing Givaudan’s 27.8%.
Analysts estimate DSM’s aroma molecule segment, roughly three times the size of Givaudan’s, has been hit by pricing pressure and volatile demand.
DSM’s EPS forecasts were cut by 5% for 2026–27, while Givaudan’s were reduced by 2–3% due to Swiss franc strength.
Givaudan’s strategic shift towards local and regional customers is also highlighted by BofA, which accounts for nearly 60% of group sales today, compared to 45% 10 years ago.
Over 20 deals have been completed by the company since 2015, increasing its revenue by over 20%, which analysts claim reinforces its relevance to emerging markets.
Givaudan’s EBITDA margins have also risen steadily across strategic planning periods, from 22.0% (2011–15) to a projected 22.9% (2021–25), alongside volume and price-driven revenue gains.
The new CHF4,800 price target is based on a 2026 P/E of 34.5x and EBITDA multiple of 24x, reflecting a roughly 15% premium to its historical average.
BofA said the premium is justified by higher growth and margin forecasts, with structurally improved cash generation.