MS favours 'structural winners' in ingredients, cuts DSM, lifts Givaudan

Morgan Stanley states its preference for what it calls "structural winners" in the ingredients sector, seeing a growing divide between portfolio winners and laggards

The brokerage says the sector's "critical 5% LFL growth hurdle rate may still be out of reach" in 2026 amid a deflationary backdrop and a modest baseline recovery

MS downgrades Swiss ingredients maker dsm-firmenich DSFIR.AS to "Equal-Weight" from "Overweight", citing a "full" valuation and limited earnings prospects

"A key (industry) trend for 2026 and beyond is that we expect a decisive shift towards kitchen-identifiable and science-backed health-enhancing solutions tied to longevity," says MS

MS sees IFF IFF.N, Givaudan GIVN.S, Symrise SY1G.DE and Novonesis NSISb.CO as particularly favourably exposed to this trend

Broker upgrades peer Givaudan to "Equal-Weight" from "Underweight", noting its valuation is now below long-term averages with limited downside risk

"We expect Fragrance & Beauty to outperform Taste segments in 2026," it adds