For his first "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer sat down with Andreas Fibig, chairman and CEO of International Flavors & Fragrances (IFF) . The stock fell sharply after the close when the company missed on earnings per share and revenue expectations. The stock ran up ahead of the release, and that means the selloff could be an opportunity to get long if investors have been waiting, according to Cramer.
"We will deliver on our guidance," Fibig said, with the company forecasting for revenue growth of 5% to 7% and earnings growth of 10%. Its acquisition of Furtarom for $7.1 billion in 2018 will help drive some of that growth. Innovative products and a push toward natural and organic ingredients will also help fuel growth. The "balance sheet is good" and the company will pay down debt with its solid cash flows, Fibig said. China and India remain "very, very strong," he added.
Okay. So the fundamentals sound good. Let's check those charts and technical indicators in light of the negative reaction to their latest numbers.
In this daily bar chart of IFF, below, we can see an overall positive trend for IFF from its May/June lows. Prices declined sharply in November and December giving back most of the prior four months of gains. In less time than the decline, IFF has regained most of its fall. Prices opened lower but they remain above the rising 50-day moving average line and above the flat 200-day line.
The volume pattern and the On-Balance-Volume (OBV) line show some interesting movement. Trading volume is heavy in September and October but then diminishes to late January suggesting that investor interest has evaporated. The daily On-Balance-Volume (OBV) line shows a more positive picture with a rise to early December signaling aggressive buying and only a shallow pullback in the second half of December.
The Moving Average Convergence Divergence (MACD) oscillator was above the zero line from July to the end of November. The indicator went to a sell in December and January but it is back in buy territory again.
In this weekly bar chart of IFF, below, we can see an interesting alignment of our favorite indicators. Prices are above the flat/bottoming 40-week moving average line.
The weekly OBV line turns lower from April to December. The line shows a little improvement from the middle of December.
The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside from above the zero line for a fresh outright go long signal.
In this Point and Figure chart of IFF, below, we ignore volume, indicators, and time. We only focus on price and price reversals.
In this chart we see a potential upside price target of $174.56. A trade at $150.93 will be a double top breakout and a trade at $155.50 will be another upside breakout.
Bottom line strategy: The indicators are giving us some mixed signals but overall I would favor an upside move from here. Aggressive trades could go long above $151 risking below $142. The $175 area is my target.