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On Friday, BofA Securities analyst George Staphos adjusted the price target for Avery Dennison (NYSE: AVY) shares, decreasing it to $215 from the previous $220, while reaffirming a Buy rating. Currently trading at $182.49, near its 52-week low of $179.20, the stock appears undervalued according to InvestingPro analysis. Staphos highlighted several reasons for maintaining the optimistic outlook despite a lower fourth-quarter performance and a cautious guide for 2025.
The analyst pointed to the conservative nature of the company’s 10-15% growth guidance for its Intelligent Labels (IL) segment. With InvestingPro data showing an overall revenue growth forecast of 5% for FY2025 and a strong financial health score of "GOOD," Staphos believes the forecast does not fully account for potential gains from new product launches in the pipeline. Additionally, the guidance for high-value (HV) categories appears achievable, considering the expected growth in IL, HV Materials, and trends in 2025 for Embelex and Vestcom.
Staphos further noted that Avery Dennison’s current valuations are attractive when compared to historical data. According to Factset, the company’s current price to earnings (P/E) ratio of 17x and enterprise value to EBITDA (EV/EBITDA) ratio of 11x are notably low when looking back to 2017.
The analyst also mentioned that various indicators, such as apparel trends, foreign exchange movements, feedback from e-tailers/retailers on IL, and parcel and box shipments, should serve as benchmarks to track Avery Dennison’s progress throughout 2025. These factors contribute to the rationale behind the maintained Buy rating despite the price target adjustment.
In other recent news, Avery Dennison Corporation (NYSE:AVY)’s fourth-quarter results narrowly missed analyst projections, with an adjusted earning per share of $2.38 and revenue at $2.18 billion. Despite this, the company presented a positive forecast for fiscal 2025, expecting a full-year adjusted EPS between $9.80 and $10.20, surpassing the current analyst consensus. In 2024, Avery Dennison achieved 19% earnings growth with an adjusted EPS of $9.43, and net sales rose 4.7% to $8.8 billion. The company also returned $525 million to shareholders through dividends and share repurchases.
In addition, JPMorgan analyst Jeffrey J. Zekaukas upgraded Avery Dennison shares from Neutral to Overweight, albeit with a reduced price target of $205.00. The upgrade was prompted by the company’s RFID/intelligent label initiative, which is seen as a key driver for long-term growth, despite a recent slowdown. JPMorgan forecasts a rebound in growth for the intelligent label sector in 2025.
However, Avery Dennison’s market value experienced a significant restatement following an expected loss of about half of its daily domestic package volume from its largest customer. As a result, JPMorgan adjusted its 2025 earnings per share forecast for Avery Dennison downward from $10.20 to $9.95. These are recent developments that reflect the company’s performance and market conditions.
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