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International Flavors & Fragrances (NYSE:IFF) -19.5% in Tuesday’s trading to its lowest in more than a decade after missing Q2 expectations and cutting its full-year sales guidance, prompting a downgrade from Stifel.
IFF (IFF) reported reported disappointing Q2 results and reduced its FY 2023 sales and adjusted EBITDA guidance by 7% and 18%, respectively, at the midpoint, with the miss and lowered guidance largely reflecting ongoing customer destocking, impacting volumes and resulting in more significant manufacturing absorption costs.
Q2 volumes declined by low double-digits, worsening sequentially, with the Functional Ingredients remaining especially challenged, accounting for 60% of the total decline, with the remaining 75% of the business declining by mid-single-digits.
Noting IFF (IFF) has reduced FY 2023 guidance three times since its December 2022 investor meeting, Stifel cut the stock to Hold From Buy with an $85 price target, sliced from $123, mostly reflecting the lack of visibility into improving volume trends, the company’s competitive position relative to peers, and lack of management credibility.
Stifel said IFF (IFF) continues to have weaker volumes than flavor and fragrance peers “largely reflecting its business mix related to Functional Ingredients and efforts to further improve/reduce inventories are expected to weigh on adjusted EBITDA.”
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Image and article originally from seekingalpha.com. Read the original article here.