We recently reiterated our Neutral recommendation on New
International Flavors & Fragrances Inc.
), anticipating the company to perform in line with the broader
International Flavors & Fragrances is one of the leading
creators and manufacturers of fragrance and flavor products. The
company provided a solid year-to-date return of 35.6%. Long-term
growth prospects are bright for the company as consumer spending
is growing as a result of strengthening global economy.
Over the long term (2013-2015 period), International Flavors
& Fragrances hopes to achieve around 4%-6% expansion in local
currency sales, about 7%-9% operating profit growth and over 10%
earnings per share growth. Capital spending over the years will
be given emphasis to seize opportunities in emerging markets.
Besides, bolt-on acquisitions will be given preferences to gain
access to desirable customers, regions, or technologies.
Talking of innovations, International Flavors & Fragrances'
collaboration with Amyris to develop and commercialize
cost-effective Fragrance Ingredients deserves special mention. We
believe that new business wins, geographical diversification,
wide product lines, continuous accomplishments in research and
intense consumer insight will be advantageous for International
Flavors & Fragrances, going forward.
Despite these compelling long-term growth prospects, near-term
headwinds surrounding the company force us to remain on the
sidelines. Risks arising from increase in debt levels as well as
negative impact from foreign currency translation might prove
detrimental to growth.
Others Stocks to Consider
International Flavors & Fragrances currently has a Zacks Rank
#3 (Hold). Other stocks to watch out for in the industry are
) with a Zacks Rank #1 (Strong Buy) while
) each carry a Zacks Rank #2 (Buy).
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