We recently maintained a Neutral recommendation on New
International Flavors & Fragrances Inc.
), a creator and manufacturer of fragrance and flavor products
operating primarily in the United States and internationally.
The company's expansion through new business wins, substantial
geographical diversifications, wide product lines, continuous
accomplishments in research and intense consumer insight are the
attractive features that International Flavors can boast of. In
September 2012, the company opened a new state-of-the-art liquid
flavors and fragrances manufacturing facilities in Singapore.
Over the long term, the company hopes to achieve around 4%-6%
expansion in local currency sales, about 7%-9% operating profit
growth and over 10% earnings per share growth.
Moreover, slowly recovering global economy is likely to spur
consumer spending which we believe will be a prime growth
catalyst for the flavors and fragrances industry. To add,
exposure in emerging markets will be an added advantage. However,
near-term concerns keep us on the sidelines and force us to
maintain a neutral stance on the stock.
Financial results in the third quarter 2012 were not very
impressive as total revenue in the quarter registered a 1%
decline impacted primarily by softness in North America and
Europe as well as a negative foreign currency translation.
Excluding currency translation, revenue grew 5%.
The Zacks Consensus Estimate for the fourth quarter is 84 cents,
representing a year-over-year growth of 13.9%. Estimates for
years 2012 and 2013 are $4.01 and $4.36, reflecting annual growth
of 7.3% and 8.7%, respectively.
The company currently bears a Zacks Rank of #2, translating into
a short-term Buy rating. It competes directly with
), among others.
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