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We recently maintained a Neutral recommendation on New York-based, International Flavors & Fragrances Inc. (IFF - Analyst Report), a creator and manufacturer of fragrance and flavor products operating primarily in the United States and internationally.

The company’s expansion through new business wins, substantial geographical diversifications, wide product lines, continuous accomplishments in research and intense consumer insight are the attractive features that International Flavors can boast of. In September 2012, the company opened a new state-of-the-art liquid flavors and fragrances manufacturing facilities in Singapore.

Over the long term, the company hopes to achieve around 4%-6% expansion in local currency sales, about 7%-9% operating profit growth and over 10% earnings per share growth.

Moreover, slowly recovering global economy is likely to spur consumer spending which we believe will be a prime growth catalyst for the flavors and fragrances industry. To add, exposure in emerging markets will be an added advantage. However, near-term concerns keep us on the sidelines and force us to maintain a neutral stance on the stock.

Financial results in the third quarter 2012 were not very impressive as total revenue in the quarter registered a 1% decline impacted primarily by softness in North America and Europe as well as a negative foreign currency translation. Excluding currency translation, revenue grew 5%.

The Zacks Consensus Estimate for the fourth quarter is 84 cents, representing a year-over-year growth of 13.9%. Estimates for years 2012 and 2013 are $4.01 and $4.36, reflecting annual growth of 7.3% and 8.7%, respectively.

The company currently bears a Zacks Rank of #2, translating into a short-term Buy rating. It competes directly with Revlon Inc-A and Estee Lauder (EL - Analyst Report), among others.

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