Jefferies sets Avery Dennison stock hold with $175 target

Published 22/04/2025, 06:44
Jefferies sets Avery Dennison stock hold with $175 target

The cornerstone of Avery Dennison ’s growth strategy is its intelligent labels and RFID segment, which currently represents 10% of its sales. This division has enjoyed a compound annual growth rate (CAGR) of 15-20% since 2017. However, the growth of RFID can vary, depending on the implementation of new or expanded programs. Avery Dennison has recently secured significant customers in the logistics and food sectors, where intelligent labels are still underutilized, suggesting a promising long-term growth trajectory for the company. The stock’s low volatility and consistent dividend growth, having maintained payments for 55 consecutive years, make it particularly attractive to stability-focused investors. The stock’s low volatility and consistent dividend growth, having maintained payments for 55 consecutive years, make it particularly attractive to stability-focused investors.

Avery Dennison anticipates its organic sales, excluding foreign exchange influences, to increase by more than 5%, building on its current revenue growth of 4.68%. The company aims to grow its base business above GDP rates, leveraging its presence in emerging markets. Since 2014, Avery Dennison has successfully increased its high-value product sales from 25% to 44% by 2024, both organically and through acquisitions, while also improving its margins by over 500 basis points. InvestingPro subscribers can access detailed analysis of the company’s growth metrics and 10+ additional exclusive insights.

The cornerstone of Avery Dennison’s growth strategy is its intelligent labels and RFID segment, which currently represents 10% of its sales. This division has enjoyed a compound annual growth rate (CAGR) of 15-20% since 2017. However, the growth of RFID can vary, depending on the implementation of new or expanded programs. Avery Dennison has recently secured significant customers in the logistics and food sectors, where intelligent labels are still underutilized, suggesting a promising long-term growth trajectory for the company.

In other recent news, Avery Dennison Corporation (NYSE:AVY) reported its fourth-quarter 2024 earnings, which narrowly missed analyst expectations. The company posted an earnings per share (EPS) of $2.38, just below the forecasted $2.39, while revenue reached $2.18 billion, slightly under the anticipated $2.2 billion. Despite these minor shortfalls, Avery Dennison experienced a 5% sales growth and a 19% increase in adjusted EPS for the full year 2024. BMO Capital Markets adjusted its outlook on Avery Dennison, reducing the price target to $226 from $252 but maintaining an Outperform rating, citing currency exchange headwinds as a factor. In another development, Avery Dennison announced that Gregory S. Lovins would resume his role as Chief Financial Officer on April 1, 2025, following a medical leave. The company’s Talent and Compensation Committee confirmed Lovins’ annual base salary at $838,500, with additional incentives. Avery Dennison’s strategic initiatives, including a contract win with Vestcom and expected growth in its Intelligent Labels segment, are anticipated to contribute positively to its revenue growth in the coming years.

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