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International Flavors Enhances Offerings for Mid-Size Customers

Zacks Equity Research

International Flavors & Fragrances Inc. IFF intends to globally expand the Tastepoint brand through its model across multiple geographic regions for providing localized services to mid-size customers in various locations.

The company will enhance its offerings to middle-market customers by leveraging Frutarom’s large client base while also fulfilling specified needs for local markets.

International Flavors had formed Tastepoint in 2017 to serve North America’s middle-market customers. Also, the integration of Frutarom has helped the company replicate its Tastepoint go-to-market blueprint in major markets, underlining its commitment to serve mid-size customers.

The Tastepoint brand is focused on servicing customers with the “can-do” approach of a smaller company. It will offer expanded portfolio to customers through International Flavors’ Taste Design. In addition to traditional flavors and total solutions, the offerings will leverage an expanded naturals portfolio, consisting colors, food protection and health ingredients.

The company’s continued focus on the mid-market companies with in-depth knowledge of their local requirements will aid International Flavors to execute its Vision 2021 strategy.

The company has made strategic acquisitions, which have helped expand its offerings and in turn, boosted profitability. Last October, the company completed the Frutarom acquisition, marking the largest deal in the industry. Together, International Flavors and Frutarom have created a global leader in natural taste, scent and nutrition with a broader customer base, diversified product offerings and more exposure to end markets, including those with a focus on naturals, and health and wellness.

During the September-end quarter’s earnings call, International Flavors issued its 2019 revenue projection of $5.15-$5.25 billion, suggesting year-over-year growth of 3-5%. Adjusted earnings per share are anticipated in the band of $4.85-$5.05, reflecting year-over-year growth of 8-11%. Adjusted earnings per share, excluding amortization, are projected at $6.15-$6.35. The company has reaffirmed its long-term financial targets for 2019-2021. On a currency neutral sales basis, it projects sales growth between 5% and 7% for the next three years, and earnings per share (EPS) growth of 10%, excluding amortization.

The global market for flavors and fragrances continues to grow, spurred by increasing demand for a variety of consumer products containing flavors and fragrances. The market is projected to grow approximately 2-3% by 2021, primarily backed by emerging markets.

Share Price Performance

Over the past three months, International Flavors’ shares have appreciated 23.3%, as against the industry’s decline of 2.6%.



Zacks Rank & Key Picks

International Flavors currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Consumer Staples space are e.l.f. Beauty, Inc. ELF, Newell Brands Inc. NWL and Helen of Troy Limited HELE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

e.l.f. Beauty has a projected long-term EPS growth rate of 3.8%. The stock has appreciated 33.8% in the past year.

Newell Brands has an estimated long-term earnings growth rate of 6%. Shares of the company have gained 6.4% over the past three months.
 
Helen of Troy Limited has an estimated long-term earnings growth rate of 7.6%. Shares of the company have gained 6.5% in three months’ time.

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