Citi has downgraded shares of Givaudan SA (GIVN: SW) (OTC: GVDNY) from Buy to Neutral and reduced its price target to CHF4,650 from CHF4,750.
The fragrance and flavor company has experienced a significant share price increase of approximately 51% over the past 12 months, reflecting its strong performance.
Citi forecasts that Givaudan will achieve around 12% organic sales growth, approximately 200 basis points of EBITDA margin improvement, and 24% EPS growth for the year 2024.
However, the firm anticipates a slight reduction in EPS for the following year, trimming estimates by 1.5% due to foreign exchange concerns.
The analyst noted that Givaudan's superior execution, which had been part of their investment thesis, is largely reflected in the current stock price. Looking ahead to 2025, Citi expects limited earnings growth, with an adjusted EBITDA increase of 5% and no growth in adjusted EPS.
The forecast is set against challenging comparisons with the current year's performance, the potential easing of some tailwinds, and a normalization of other operating income.
Citi pointed out that Givaudan's valuation, which stands at 32 times price-to-earnings excluding all amortization, is the second highest in its peer group. Additionally, the price-to-earnings growth (PEG) ratio is significantly higher than that of its closest peer.
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