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Investing.com - BMO Capital has lowered its price target on Avery Dennison (NYSE:AVY) to $207.00 from $216.00 while maintaining an Outperform rating on the stock. The $14 billion market cap company currently trades at a P/E ratio of 20, with InvestingPro analysis indicating the stock appears fairly valued based on its proprietary Fair Value model.
The firm noted that Avery Dennison beat second-quarter expectations despite facing a difficult demand environment, particularly in the apparel sector. The company’s performance was bolstered by strength in higher-margin businesses such as Vestcom and Graphics/Reflectives, which helped offset weakness in its base business. With annual revenue of $8.75 billion and a healthy free cash flow yield of 4%, the company maintains strong financial fundamentals.
BMO Capital pointed out that Avery Dennison’s management has set conservative expectations for the third quarter, roughly in line with consensus estimates. These projections assume no macroeconomic improvement and continued softness in apparel, despite some signs of possible improvement in that segment.
The research firm highlighted Avery Dennison’s significant free cash flow and cash conversion capabilities as positive factors. BMO also noted the company is positioned for double-digit EPS growth in 2026 and 2027, including a re-acceleration in its RFID business.
BMO Capital believes Avery Dennison stock is poised for multiple recovery and solid upside, citing beatable expectations for 2025 as an additional factor supporting its continued Outperform rating despite the price target reduction. The company maintains a "GOOD" overall financial health score according to InvestingPro’s comprehensive evaluation system.
In other recent news, Avery Dennison reported its second-quarter earnings for 2025, revealing an adjusted earnings per share (EPS) of $2.42, which exceeded analyst forecasts of $2.39. However, the company fell short of its revenue expectations, reporting $2.22 billion compared to the anticipated $2.24 billion. Despite the mixed results, Citi raised its price target for Avery Dennison to $191 from $185, maintaining a Neutral rating. The company also provided a third-quarter outlook that was slightly more optimistic than initially expected. These developments reflect ongoing challenges, particularly within Avery Dennison’s Intelligent Labels platform. Analysts continue to monitor the company’s performance closely, especially in light of the broader market trends. The recent earnings report and subsequent analyst adjustments highlight the importance of Avery Dennison’s strategic initiatives moving forward.
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