Wolfe Research projects a relatively steady set of near-term targets for two major players in the ingredients space, while flagging several cost and demand variables that could shape the back half of the fiscal year.
For Ashland, the firm expects management to present stable fiscal 2026 guidance and to highlight favorable trends in personal care and life sciences. Those end-markets are seen as supportive, though Wolfe cautions that rising input costs and factors tied to Hopewell could create headwinds that investors and managers will need to monitor.
Turning to International Flavors & Fragrances, Wolfe anticipates a second quarter that will roughly match consensus expectations and a fiscal 2026 outlook that remains stable. The research house notes a backdrop of rising household costs but emphasizes the importance of segment-level performance, particularly versus European peers, when assessing IFF's near-term trajectory.
Wolfe Research retains a Market Weight rating on the broader ingredients sector. The firm is watching several upside and downside forces: the potential for higher raw-material and input costs, evolving consumer caution, and recent geopolitical tensions in the Middle East that have affected sentiment across the industry. Commentary from company management on pricing strategies and cost control will be important for shaping second-half expectations, with freight and logistics expenses specifically highlighted as areas to watch.
Raw material inflation is expected to emerge as a factor in late 2026 and to continue into 2027, according to Wolfe's outlook. That timing is likely to be consequential for margin planning and pricing actions across the sector.
On end markets, Wolfe describes a balanced picture. Strengths are evident in health and beauty and in personal care categories, while grocery volumes and industrial end-market demand appear weaker. Within scent markets, fine fragrance is described as relatively resilient, though Wolfe still forecasts IFF results in scent to be flat to down by a low-single-digit percentage, reflecting difficult comparisons in fine fragrance.
Personal care demand is expected to be a bright spot, driven by constructive indicators in hair and skin care products that should help underpin second-half narratives. In taste and food ingredients, results are likely to be more mixed, reflecting subdued grocery spending patterns; nevertheless, certain subsegments such as health probiotics, food cultures and enzymes are noted as brighter areas.
Life sciences is another area where Wolfe sees improving dynamics, driven by higher volumes of outsourced service delivery and better pricing trends. On geographic trends, the research house expects South American volumes to stabilize or show modest growth off a lower base, a view Wolfe describes as consistent with peer commentary.
Overall, Wolfe Research presents a cautiously constructive near-term view for Ashland and IFF, tempered by cost pressures, sector-specific comparisons and broader demand variability that will influence second-half outcomes.