Strong volume growth enhances International Flavors & Fragrances stock potential

On Monday, Stifel made a positive move on International Flavors & Fragrances (NYSE:) stock, upgrading it from Hold to Buy and increasing the price target to $115 from the previous $95.

The firm’s decision is based on the anticipation of the company’s performance exceeding its own 2024 outlook. Stifel’s analysis suggests that International Flavors & Fragrances’ guidance for the coming year is on the conservative side.

The upgraded outlook is supported by a projected increase in sales and adjusted EBITDA for 2024-2025, which Stifel estimates to be 1.5% and 4.4% higher than the company’s highest expectations, respectively. The firm notes a significant improvement in IFF’s volumes in the first quarter of 2024, marking a shift from the declining trend observed over the previous five quarters.

Stifel expects this positive volume growth trend to continue through 2024, with mid-single-digit growth rates, partly due to more favorable comparisons and a recovery in growth for the company’s Flavor & Fragrance (F&F) customers in the second half of 2024.

Stifel further estimates that the incremental sales could contribute approximately $95 million more than the midpoint of the company’s current adjusted EBITDA guidance, indicating a potential 4%-5% upside.

Currently, shares of International Flavors & Fragrances are trading at a 13% discount compared to industry peers in the F&F sector. According to Stifel, improved performance from the company is expected to close this valuation gap.

In other recent news, International Flavors & Fragrances (IFF) has been in the spotlight with several updates. Mizuho Securities has raised its price target for IFF shares to $106, anticipating leadership changes that could spur further restructuring initiatives. Meanwhile, Jefferies has increased its price target to $111, maintaining a Buy rating and projecting positive near-term trends for IFF.

Oppenheimer initiated coverage on IFF with an Outperform rating and a price target of $116.00 per share, highlighting the company’s ongoing transformation in line with consumer demand for health and environmentally friendly products.

However, Morgan Stanley downgraded IFF’s stock from Overweight to Equalweight, while keeping a price target of $100.00, due to the stock nearing the firm’s set price target and the consensus on FY24 Adjusted EBITDA aligning with its forecast.

BofA Securities has also revised IFF’s price target to $99, following a strong first quarter marked by organic growth and margin expansion. As part of its ongoing growth and transformation initiatives, IFF has added Margarita Paláu-Hernández to its Board of Directors, a move expected to support strategic planning and execution. These are the recent developments for International Flavors & Fragrances.

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