Today‘s Morning Meeting

Research evidence excerpt

Today‘s Morning Meeting

Europe Equity Research

Europe First to Market 08 July 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting

CW | DSM-Firmenich (Chetan Udeshi, CFA) (DSFIR NA, UW)

Premature rally: place on -ve CW as downgrade risk persists; valuation looks stretched

DSM-Firmenich (DSFIR) shares are up 40% over the past three months (vs. sector +6%) despite being down 3% over the past

year (vs. sector +4%), likely reflecting easing concerns around the consumer-demand outlook following the recent sharp

decline in oil prices. We view the recent optimism as premature for four reasons: 1) Earnings downgrades are likely to

continue - our FY26/27E adj EPS is ~3%/8% below Bloomberg consensus, with historical seasonality suggesting further

downside risk; 2) Growth expectations look demanding -consensus/guidance imply ~5% mid-term OSG versus ~3–4%

CAGR over the past four years, which we find difficult to underwrite, especially given a more competitive environment across

parts of the portfolio; 3) Earnings quality/FCF conversion remain weaker - meaningful restructuring/other costs persist

below adjusted results and recent FCF conversion (as % of adj EBITDA) has lagged peers, while the shares already trade at

premium multiples; and 4) Valuation appears stretched -~14x FY26/27E EV/EBITDA, 26x/25x FY26/27E P/E and 2.9%/3.3%

FY26/27E FCF yield, with P/E at a sizeable premium to Croda (OW) (~20x/17x), which we do not view as justified given the

above. Given the downside risk to both 3Q OSG (JPMe +1% vs. consensus +3.7%) - as customer destocking steps in after 1H

pre-buying while end markets remain choppy—and 2H earnings (via margins), we place the shares on Negative CW ahead of

the 1H results on 30 Jul.