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On Thursday, Baird analyst Ghansham Panjabi adjusted the price target for Avery Dennison (NYSE:AVY) shares, reducing it from $220.00 to $210.00, while maintaining an Outperform rating on the stock. The revision reflects concerns about global trade and growth in Intelligent Labels, known as RFID, but the firm remains optimistic about the company’s performance. According to InvestingPro data, analyst targets range from $166 to $236, with the stock currently trading at $170.25, suggesting potential upside of 16%.
Panjabi noted that despite the challenging environment influenced by global trade issues and RFID growth concerns, Avery Dennison has maintained strong operational execution. The company’s robust capital position, with a net debt to EBITDA ratio of 2.3x, provides flexibility in capital allocation, particularly in a period of uncertain near-term demand. InvestingPro analysis reveals strong financial health metrics, with an overall score of 2.85 (GOOD), supported by a solid current ratio of 1.03 and an impressive Altman Z-Score of 4.86, indicating financial stability. For deeper insights into AVY’s financial health and 8 additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
Baird’s continued confidence in Avery Dennison is based on the company’s ability to navigate through the current market conditions. The Outperform rating is supported by the belief that Avery Dennison’s operational strengths and financial discipline will prevail amidst investor skepticism.
The new price target of $210.00 set by Baird is derived from applying approximately a 20 times multiple to the firm’s 2026 earnings per share (EPS) estimate of $10.50 for Avery Dennison. This valuation reflects Baird’s long-term outlook on the company’s earnings potential.
In summary, despite lowering the price target, Baird remains positive on Avery Dennison’s stock due to the company’s solid execution and financial health. The Outperform rating indicates Baird’s expectation that Avery Dennison will continue to perform well against the backdrop of current market challenges.
In other recent news, Avery Dennison reported its first-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $2.30, which was slightly below the forecast of $2.32. The company’s revenue also fell short, coming in at $2.15 billion against an expected $2.16 billion. Despite this, the Intelligent Labels segment showed mid-single-digit growth, indicating strong demand in certain areas. However, apparel revenue is expected to face a potential mid-single-digit decline in the second quarter. Additionally, Avery Dennison returned $331 million to shareholders through share repurchases and dividends, reducing the share count by 2.3 million shares. JPMorgan analysts downgraded Avery Dennison’s stock rating from Overweight to Neutral, also lowering the price target from $205.00 to $172.00. This decision follows the company’s flat year-over-year sales and earnings, despite previous significant EPS growth. Analysts highlighted currency headwinds and a slight increase in volumes offset by a minor decrease in prices as factors influencing the downgrade.
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