Jefferies initiates coverage of French small cap Robertet, recommends buying

Analysts from Jefferies International announced this Thursday that they have initiated coverage on Robertet (EPA:ROBF), a French family business specializing in natural ingredients for perfumes and fragrances.

The analysts recommend buying the stock, highlighting the company's growth potential in an expanding fragrance market. Here is a summary of the key points from the report.

They particularly noted that Robertet is the 7th largest player globally in the Flavour & Fragrance (F&F) sector, with a significant competitive advantage due to its differentiated access to natural raw materials.

One-third of its business is dedicated to natural raw materials, which it supplies to other producers or uses directly in applications such as aromatherapy. This specialization in natural raw materials is one of Robertet's main strengths in maintaining its leading position in the industry.

Furthermore, Jefferies' analysts reminded that Robertet aims to achieve a revenue of approximately €1 billion by 2030, implying a compound annual growth rate (CAGR) of 4.8% from the 2023 revenue figures.

Jefferies believes this target is achievable, especially due to the focus on fast-growing markets like Asia and Latin America, where Robertet is currently underrepresented compared to its peers. The company could also support its growth through targeted acquisitions.

From a cyclical perspective, Jefferies highlighted that the fragrance market remains solid both cyclically and structurally, with sustained growth prospects for the next two years.

This should particularly benefit Robertet due to its strong exposure to fine fragrances, a segment of the fragrance market that outperforms others in terms of growth.

In this context, Jefferies has set EBITDA forecasts 4% above consensus estimates for the next three years, highlighting the high free cash flow (FCF) yield compared to its peers.

Lastly, Jefferies has set a price target of €1,040 for Robertet's stock, representing a 22% upside potential from the current price.

Source: Investing.com