International Flavors & Fragrances Sales Outlook Revised Downwards
International Flavors & Fragrances (IFF) suffered a significant drop in stock prices after the renowned scent and flavor manufacturer revised its full-year sales forecast. The company cited weakened customer demand as the primary reason for this adjustment.
In a statement released on Monday after the market closed, International Flavors revealed that it now expects its sales for the entirety of 2023 to range between $11.3 billion to $11.6 billion. This forecast marks a notable reduction from the previously projected guidance of $12.3 billion. The revised outlook reflects the company's belief that volume recovery in the latter half of 2023 will not materialize as anticipated.
Furthermore, International Flavors anticipates that its adjusted earnings before interest, taxes, depreciation, and amortization for the full year will fall between $1.85 billion to $2 billion. This falls significantly short of their initial guidance figure of $2.34 billion.
Stifel analyst Mark Astrachan expressed his concerns about these developments in a research note, asserting that the company's shares will likely experience substantial declines in response. He emphasized that this downgrade was inevitable due to the lack of visibility regarding potential improvements in volume trends and International Flavors' competitive position.
In light of these revisions, Astrachan downgraded International Flavors' shares from Buy to Hold and reduced his price target from $123 to $85.
At the time of writing, International Flavors has not provided any official response to external requests for comment.
Second Quarter Earnings Report: International Flavors
International Flavors has reported its second-quarter earnings, disclosing a profit of 86 cents per share with a total revenue of $2.93 billion. However, this fell short of analysts' expectations, who were anticipating earnings of $1.10 per share and revenue of $3.07 billion according to FactSet.
Chief Executive Frank Clyburn acknowledged the challenges faced by the industry, stating that the decline in sales and volume pressures in the second quarter were a result of the broader macroeconomic issues. Despite an increase in prices, the company experienced a drop in sales primarily due to a decline in their Nourish and Health & Biosciences segments. Christopher Parkinson, an analyst from Mizuho, predicts that the headwinds in the Nourish segment will heavily impact investors' discussions and significantly weigh on the company's shares.
Following these results, shares of International Flavors plummeted by 22% to $62.65 during pre-market trading on Tuesday. This makes International Flavors the worst performer in the S&P 500 according to FactSet. Year-to-date, the stock has already declined by 23%.
All Rights Reserved © 2024
Post a comment