-EQUITY RESEARCH: GIVAUDAN

Givaudan Corporation (“Givaudan” or “Company”) is a Swiss multinational company that primarily engages in the development and production of high-quality ingredients of flavors, fragrances, and active beauty ingredients that are custommade and sold under confidentiality agreements. The company operates through two main divisions: i) Taste & Wellbeing: This division offers flavors, taste, functional, and nutritional solutions for the food industry, including savory, dairy, sweets, and beverages. ii) Fragrance & Beauty: This division creates fragrances and develops beauty and well-being solutions for personal care, fabric care, hygiene, home care, fine fragrances, and beauty products. This report issues a SELL recommendation for Givaudan, with a 2024 year-end price target (PT) of $2,704.41, representing a downside potential of 42.712%, against the closing price of $4,720.76, as of July 28, 2024. Givaudan’s valuation was performed using the FCFF model and complemented with other valuation methods, including FCFE, DDM, and Multiple Approach. The SELL recommendation is driven by: i). High Debt Levels and ii) Slowing Revenue Growth. However, Givaudan’s stock is trading at a premium. This suggests that the market is expecting significant growth in the future, which is not justified by the company's current financial performance. Givaudan's investment profile is assessed as medium-risk. Despite Givaudan's strategic diversification, broad product range aligned with health and sustainability trends, and recession-resistant portfolio, the company faces significant risks. The company’s risk matrix identifies climate change and water scarcity as high-impact risks, with the potential to increase operating costs, reduce revenue, and damage the company’s reputation. However, the company’s sustainable sourcing, carbon reduction initiatives, waste and water management, and sustainable innovation practices help mitigate long-term operational risks related to climate change and resource scarcity. JEL classification: G02; G20; G21; G24.