On Tuesday, Deutsche Bank adjusted its stance on Symrise AG (SY1:GR) (OTC: SYIEY) stock, moving the fragrance and flavoring manufacturer's rating from Hold to Buy. The financial institution also increased the price target to EUR120.00, a jump from the previous EUR105.00.
The upgrade follows a series of investor meetings with Symrise's CFO Olaf Klinger, which led to a positive reassessment of the company's prospects. Despite acknowledging existing challenges such as margin pressure in the aroma sector and wage inflation, Deutsche Bank noted that the company is making progress.
Symrise is expected to benefit from cost reductions, with half of the planned cuts taking effect in the first half of the year, and from positive volume leverage.
Symrise's first quarter showed only modest price pressure, and there are no signs of the situation worsening. The company's full-year organic sales growth (osg) is projected to be between 5-7%, not accounting for foreign exchange pricing.
Deutsche Bank suggests there might be potential for higher earnings before interest, taxes, depreciation, and amortization (EBITDA) margins than the "~20%" target, anticipating a margin of 20.3% due to decreasing input costs.
Looking ahead to the second quarter and first half-year update, Deutsche Bank expects Symrise to report a solid performance. Predictions include a 10.8% increase in osg, similar to the first quarter, which is supported by easier comparisons and approximately 7% growth excluding foreign exchange pricing.
Additionally, the underlying (U/L) EBITDA margin is forecasted to rise by 80 basis points year-over-year to 20.5%. These projections place Deutsche Bank's expectations 3% above the consensus for the first half-year EBITDA.
InvestingPro Insights
Following Deutsche Bank's optimistic outlook on Symrise AG, the InvestingPro platform provides additional insights that could be pertinent for investors. Firstly, Symrise has demonstrated a strong commitment to shareholder returns, having raised its dividend for 14 consecutive years and maintained dividend payments for 17 consecutive years. This consistent performance in returning value to shareholders is underscored by the fact that the company’s liquid assets surpass its short-term obligations, indicating financial stability.
InvestingPro data highlights a market capitalization of $16.13 billion and a robust revenue growth over the last twelve months of 2.42%, reflecting the company’s ability to expand its business. However, the data also shows that Symrise is trading at a high earnings multiple, with a P/E ratio of 43.39 and a PEG ratio of 2.0, suggesting that the stock may be valued optimistically relative to its near-term earnings growth.
For investors looking to delve deeper into Symrise's financials and future prospects, there are additional InvestingPro Tips available. With these insights, investors can make more informed decisions, and by using the coupon code PRONEWS24, they can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Visit InvestingPro for further details on the company's performance and metrics.
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