Why Most Wall Street Analysts Recommend a ‘Hold’ for IFF



Analysts’ consensus on IFF

The number of analysts covering International Flavors and Fragrances (IFF) has gone up from 15 to 16 in the last two months. Of the 16 analysts, 31% of the analysts have recommended the stock as a “buy,” 62% of the analysts have recommended the stock as a “hold,” while the remaining 5% of the analysts have given a “sell” recommendation for IFF.

In the past two months, the analysts’ consensus 12-month mean target price for IFF has moved up from $137.15 to $142.42 currently, which implies a potential return of 5.3% from the closing price of $135.28 on August 17, 2017.

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Why analysts recommend a “hold”

International Flavors and Fragrances continues to work towards its 2020 vision of increasing its revenue by $500 million by way of acquisitions. The company has acquired three companies in the past nine months. Further, to drive its organic growth, IFF has opened a new company, Tastepoint, to tap middle-market North American customers. Also, IFF’s better-than-expected 2Q17 earnings could have prompted analysts to recommend a “hold” for IFF.

Target prices from individual brokerage firms

  • J.P. Morgan (JPM) has given a price target of $133 for IFF. However, as of August 17’s closing price, the stock was 1.7% above the recommended target price.
  • Deutsche Bank (DB) recommends a target price of $139 for IFF, implying a potential return of 2.8% from its August 17, 2017, closing price of $135.28.
  • Stifel has raised its target price on IFF to $136 as against the earlier recommended price of $129. The new target price implies a potential return of 0.5% over the closing price of $135.28 as of August 17, 2017.

Investors can hold International Flavors and Fragrances indirectly by investing in the iShares U.S. Basic Materials ETF (IYM), which has invested 1.8% of its portfolio in IFF. This ETF also provides exposure to PPG Industries (PPG) with a weight of 4.4% as of August 17, 2017.

In the next part, we’ll look into IFF’s valuations.


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