Last Update 14 Dec 25

Fair value Decreased 0.72%

IFF: 2026 Demand Recovery Will Drive Rebound From Cyclical Headwinds

Analysts have trimmed their price target for International Flavors & Fragrances by less than $1 to about $81.49, reflecting slightly higher discount rates and modestly lower long term profit expectations, even as they still anticipate eventual growth reacceleration.

Analyst Commentary

Recent Street research reflects a mixed but generally constructive view on International Flavors & Fragrances, with modestly reduced price targets balancing execution risks against potential for margin improvement and renewed growth in the medium term.

Bullish Takeaways

Bullish analysts highlight that the stock continues to trade at a steep discount to broader U.S. consumer staples peers, suggesting meaningful upside if execution improves and sentiment normalizes.
Some see scope for growth reacceleration by fiscal 2026, arguing that end market volumes and pricing should gradually recover as destocking pressures ease and customer demand stabilizes.
The long term setup is framed as attractive for investors willing to look through near term volatility, with potential multiple expansion if the company can demonstrate consistent free cash flow generation.
Supportive ratings, even alongside lower targets, indicate confidence that current headwinds are cyclical rather than structural, with eventual improvement in earnings quality and visibility.

Bearish Takeaways

Bearish analysts emphasize a deteriorating macro backdrop, with commentary that company messaging and near term trends remain negative, creating downside risk to volume and pricing assumptions.
Weakness and recent slippage in certain commodity exposed businesses raise concerns about near term margin resilience and the ability to fully offset cost and mix pressures.
Industrial end markets are described as highly inconsistent, which heightens execution risk around delivering on guidance and targeted cost savings.
Reduced price targets, including some that cluster below the current trading range, signal concern that consensus may still be too optimistic on the pace of recovery and that valuation could compress further if results disappoint.

What's in the News

Implemented the Colibri industrial dosing robot at the Chin Bee, Singapore facility to produce fragrance sample batches in minutes, quadrupling speed and boosting automation for Greater Asia customers (Key Developments).
Installed a nature based green hydrogen production facility at the Benicarlo, Spain plant with Iberdrola, capable of 100 tons of clean hydrogen annually and eliminating 2,000 tons of CO2 emissions per year, to support IFF's 2030 and 2040 emissions targets (Key Developments).
Reiterated full year 2025 guidance, maintaining expected sales of $10.6 billion to $10.9 billion and 1% to 4% comparable currency neutral sales growth, with performance anticipated at the lower end of the range (Key Developments).
Announced a strategic collaboration with BASF to advance Designed Enzymatic Biomaterials technology, aiming to deliver next generation enzyme systems and biobased polymers for cleaning and personal care applications with improved sustainability (Key Developments).
Unveiled plans for a new scent creative center in Mumbai, India, more than doubling local footprint and adding advanced labs and sensory spaces to better serve a fast growing fragrance market by 2026 (Key Developments).

Valuation Changes

Fair Value Estimate has edged down slightly, from about $82.08 to approximately $81.49 per share, reflecting modestly lower long term profit expectations.
Discount Rate has risen slightly, from roughly 8.07% to about 8.14%, indicating a marginally higher required return in the updated model.
Revenue Growth has been effectively maintained, ticking down only fractionally from about 0.743% to approximately 0.743% in the long term assumption.
Net Profit Margin has declined modestly, from around 6.83% to roughly 6.69%, contributing to the small reduction in intrinsic value.
Future P/E multiple has increased slightly, from about 34.45x to roughly 34.99x, suggesting a marginally higher valuation multiple applied to forward earnings.

Strategic divestitures and R&D investments are sharpening focus on higher-margin, innovative products, expected to boost future growth and earnings quality.
Expansion in emerging markets and rising demand for health-conscious products position the company for sustained revenue growth and premium pricing.
Softness in key markets, product commoditization, and reliance on innovation threaten profitability, while capital intensity and local competition could limit growth and margin expansion.

Catalysts

About International Flavors & Fragrances

Manufactures and markets food, beverage, health and biosciences, scent, pharma solutions, and complementary adjacent products in the United States, Europe, and internationally.What are the underlying business or industry changes driving this perspective?

Recent divestitures of commodity businesses (e.g., Pharma Solutions, Soy Crush, Concentrates, Lecithin) and the ongoing strategic evaluation of the Food Ingredients segment are increasing IFF's focus on differentiated, higher-margin, innovation-driven products-supporting future margin expansion and higher earnings quality.
Ongoing investments in R&D and capacity (especially in Health & Biosciences, Taste, and Specialty Fragrance Ingredients) are strengthening the company's innovation pipeline; management expects these initiatives to accelerate revenue and profit growth beginning in 2026 and reaching full impact by 2027.
IFF is positioned to benefit from rising consumer demand for clean-label, health-focused, and better-for-you products-trends that are accelerating globally with regulatory support (such as sugar/salt/fat reduction labeling in both developed and emerging markets), which is expected to drive higher volume growth and support premium pricing.
Proactive expansion and renewed focus in high-growth emerging markets-most notably Latin America, EMEA, and Asia-are expected to capture increased consumption as urbanization, middle class growth, and shifting dietary patterns fuel demand for value-added food and personal care ingredients, acting as a tailwind for long-term revenue growth.
The company's significant deleveraging and strengthened balance sheet (now at 2.5x net debt/EBITDA after divestitures) have restored financial flexibility, enabling increased reinvestment in core businesses and disciplined capital returns (dividends, share buybacks), supporting a sustainable long-term EPS growth profile.

International Flavors & Fragrances Earnings and Revenue Growth

International Flavors & Fragrances Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming International Flavors & Fragrances's revenue will decrease by 0.3% annually over the next 3 years.
Analysts assume that profit margins will increase from -3.5% today to 6.9% in 3 years time.
Analysts expect earnings to reach $784.4 million (and earnings per share of $3.23) by about September 2028, up from $-393.0 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $864 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 35.1x on those 2028 earnings, up from -42.4x today. This future PE is greater than the current PE for the US Chemicals industry at 25.9x.
Analysts expect the number of shares outstanding to grow by 0.24% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.11%, as per the Simply Wall St company report.

International Flavors & Fragrances Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing softness in key markets such as North America and China, along with specifically weak performance in the Health segment of Health & Biosciences, may cause negative growth and drag revenue and net margins in the near to medium term.
The Fragrance Ingredients business is experiencing sustained downturns due to low-cost competition and commoditization, with continued volume and pricing pressures expected to persist until at least 2026, which could erode overall profitability and compress margins.
The company's reliance on successful innovation and R&D pipeline improvements-especially in probiotics and specialty ingredients-creates a risk if these new products do not reach commercialization or fail to offset declining legacy businesses, potentially slowing long-term revenue growth and adversely affecting earnings.
Food Ingredients, despite margin improvement efforts, remains more capital intensive with potential stranded costs and operational complexity arising from ongoing divestitures or a future sale; failure to fully resolve these issues could constrain free cash flow and reduce net income.
Increasing challenges from rapidly innovating local competitors and slower growth in developed markets may limit IFF's ability to consistently outperform the market, reducing pricing power and pressuring both top-line growth and future margin expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $84.518 for International Flavors & Fragrances based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $105.0, and the most bearish reporting a price target of just $68.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $11.4 billion, earnings will come to $784.4 million, and it would be trading on a PE ratio of 35.1x, assuming you use a discount rate of 8.1%.
Given the current share price of $65.07, the analyst price target of $84.52 is 23.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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