IFF's Leverage to Improve by 2025, Sales Momentum to Boost EBITDA, Projects Analyst

Stifel analyst Mark S. Astrachan upgraded International Flavors & Fragrances Inc. IFF stock to Buy from Hold with an increased price target of $115 from $95.

The analyst sees 2024 guidance as conservative and is increasing the sales and adjusted EBITDA forecasts for 2024-2025 by 1.5% and 4.4% above the company’s top-end targets.

IFF’s volumes rebounded strongly in the first-quarter 2024, rising mid-single-digits after five quarters of decline, writes the analyst.

Also Read: IFF’s Focus On Health And Environment Set To Drive Stock Momentum, Says Analyst

Astrachan expects mid-single-digit volume growth throughout 2024, driven by improved comparisons and a return to growth among many F&F customers in the second half of 2024.

The analyst further adds that incremental sales are projected to have a ~30% contribution margin, potentially adding about $95 million to the midpoint of the company’s adjusted EBITDA guidance, equating to a ~4%-5% increase.

Astrachan anticipates leverage will decrease to around 3.0x by year-end 2025, down from 4.7x at the end of the first quarter of 2024, primarily due to Pharma segment sales in the first half of 2025 and improving free cash flow.

The company expects to release the second quarter FY24 results on August 6, 2024.

IFF stock has gained over 15% in the last 12 months. Investors can gain exposure to the stock via SHL Telemedicine Ltd VanEck Morningstar Wide Moat Value ETF MVAL and IShares Emergent Food And AgTech Multisector ETF IVEG.

Price Action: IFF shares are up 2.78% at $98.33 at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.