J.P. Morgan adds Givaudan to Positive Catalyst Watch on strong Q3 outlook

Investing.com -- J.P. Morgan on Monday put Givaudan on Positive Catalyst Watch ahead of its Oct. 13 third-quarter results, expecting organic sales growth of 6.7%, above consensus of about 5%.

The broker, which rates Givaudan “overweight,” said the results could prompt upward revisions to its 2026 and 2027 sales and margin forecasts.

It expects like-for-like sales growth of 5.0% in 2026 and 5.6% in 2027, versus consensus of 4.2% and 4.7%, respectively, while stronger sales should also lift the adjusted EBITDA margin.

Givaudan shares were down about 3% since the bank’s previous preview, a factor behind the positive catalyst call.

J.P. Morgan expects Givaudan to be the fastest-growing company among its ingredients peers in the second half of 2026, which it said could support a wider valuation premium as peers have re-rated significantly this year.

For the third quarter, the bank forecasts organic sales growth of 6.7%, up from 4.3% in the second quarter, driven mainly by 6.2% volume growth.

It expects pricing growth of 0.5% and a 2026 EBIT margin of 24.1%, slightly above consensus of 23.8%.

The bank expects 2026 earnings per share of CHF 135.1 and 2027 EPS of CHF 141.8, up from CHF 133 and CHF 139, respectively, in its forecasts a month ago.

Across the ingredients sector, J.P. Morgan expects third-quarter like-for-like growth of 5.2%, with all companies in its coverage accelerating from the previous quarter on stronger volumes, while pricing and product mix remain weaker. It forecasts growth of 3.7% for Kerry and 4.8% for Symrise, compared with 6.7% for Givaudan.

More broadly, J.P. Morgan expects European consumer staples companies to deliver upside surprises in third-quarter sales and profit forecasts, following two quarters of better-than-expected sales.

It sees organic growth of about 5% in ingredients, nearly 4% in food, household and personal care, and just over 4% in beverages, supported by beer and soft drinks.

The bank cited continued emerging-market momentum excluding China, favourable European weather for ice cream, beer and soft drinks, and a return of pricing as key drivers.

J.P. Morgan continues to favour beer and ingredients for their stronger sales growth, along with selected food, household and personal-care stocks. It largely kept its 2026 EPS forecasts unchanged across the sector.

Higher oil prices in recent months have increased the risk of renewed input-cost inflation, although the bank expects the impact to be greater in 2027. Higher interest rates could also weigh on net interest costs when companies refinance debt.

European staples trade at about 18 times 12-month forward earnings, below their long-term average of 19 times and at a 22% premium to the broader market, versus a historical premium of 43%. J.P. Morgan said valuations therefore look attractive, with most stocks trading at 12-16 times 2027 earnings.

Givaudan traded at CHF 3,360 at the Oct. 2 close, equivalent to 24.9 times 2026 earnings and 23.7 times 2027 earnings, compared with 24.4 times and 22.4 times for J.P. Morgan’s consumer ingredients group.

Catalyst Watch is a short-term indicator used by J.P. Morgan ahead of specific events and can differ from its longer-term, sector-relative stock ratings.

Original Article

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