🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

BofA raises IFF shares target on strong Q1 performance

EditorEmilio Ghigini
Published 05/10/2024, 06:34 PM
IFF
-

On Friday, BofA Securities updated its stance on International Flavors & Fragrances (NYSE:IFF) shares, raising the price target to $99 from the previous $87, while maintaining a Neutral rating on the stock. The adjustment comes after International Flavors & Fragrances reported a robust first quarter, marked by organic growth and margin expansion.

The firm cited several reasons for the increased price target, including improved earnings estimates that now surpass the company's own guidance. The new earnings per share (EPS) forecast for 2024 stands at $4.05, up from $3.85.

Additionally, the valuation model reflects a higher multiple of 23.8 times earnings, up from 22 times, which is one standard deviation above the 10-year average of 21.5 times.

The revised price target also incorporates changes in the firm's discounted cash flow (DCF) analysis. The weighted average cost of capital (WACC) has been adjusted to 7.5% due to a higher equity value, while the terminal growth rate has been increased to 3% from 2.5%, reflecting a more optimistic long-term outlook for the company.

The analyst noted International Flavors & Fragrances' positive direction in 2024, including a dividend cut and the sale of its Pharma segment, which is expected to help the company achieve its leverage target upon completion.

The company has also been re-focusing its operations following two years of distractions related to the DuPont (NYSE:DD) deal and has made significant productivity gains year to date.

Despite the improved forecast and positive developments, the analyst believes that the stock's current valuation is fair, leading to the decision to reiterate a Neutral rating. This suggests that while the company's fundamentals have improved, the stock price may already reflect these advancements.

InvestingPro Insights

International Flavors & Fragrances (NYSE:IFF) has recently caught the attention of investors with its notable performance. According to InvestingPro data, the company boasts a significant market capitalization of $24.78 billion. While the P/E ratio currently stands at a negative -9.91, indicating that earnings are not covering the stock price, the company has shown a strong return over the last week with a 12.03% increase and an impressive 37.3% uptick over the last six months, aligning with the analyst's recognition of the company's robust first quarter.

Two InvestingPro Tips highlight the company's shareholder appeal: IFF has raised its dividend for 21 consecutive years and has maintained dividend payments for 54 consecutive years, which could be particularly attractive to income-focused investors. Moreover, the dividend yield is currently at 1.65%, a factor that might be taken into account when considering the stock's total return potential. Analysts have also revised their earnings upwards for the upcoming period, suggesting a positive outlook for the company's profitability.

For those looking to delve deeper into the financials and future prospects of International Flavors & Fragrances, InvestingPro offers a wealth of additional tips. To access these insights and enhance your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 13 additional InvestingPro Tips available, which could provide valuable guidance for making informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.