Psagot has started coverage of one of the stars of the Tel Aviv Stock Exchange in recent times, food flavorings and specialty ingredients company Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; OTCBB:FRUTF), run by Ori Yehudai. In the review by analyst Noam Pinko and research assistant Avraham Perlmutter under the headline "Frutarom - Massive Growth Already Priced In" the two write: "The company's growth strategy has proved itself in recent years and has turned it into a world leader. The company's share price has significantly outperformed competitors, and the indices."
Nevertheless, Psagot estimates that the market has already priced in continued aggressive growth by the company. "Our model takes into account the management's growth forecasts and an improvement in profitability, and we reach a price target of NIS 185. Our capitalization rate (8%) includes additional risk arising from an assumption of very high growth."
Psagot rates Frutarom "Hold", with a price target below market (currently NIS 190.10), estimating that the high sales growth expected in the coming years is already priced into the stock.
In the past five years, Frutarom has invested some $450 million in mergers and acquisitions, and its sales revenue grew from $450 million in 2010 to $870 million in 2015. Psagot estimates revenue will reach over $1.1 billion in 2016.
Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2016
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