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On Friday, JPMorgan analyst Jeffrey J. Zekaukas upgraded Avery Dennison shares, trading on the New York Stock Exchange (NYSE:AVY), from Neutral to Overweight, albeit with a reduced price target of $205.00, down from the previous $210.00. Zekaukas highlighted Avery’s RFID/intelligent label initiative as a key driver for long-term growth, despite a recent slowdown in its growth rate. With a market capitalization of $14.66 billion and analyst targets ranging from $169 to $252, the company maintains a "GOOD" financial health score according to InvestingPro data.
In 2024, Avery Dennison’s intelligent label business experienced a deceleration, with growth rates dropping from around 15% to approximately 8-9%. This was attributed to volatility in shipping labels within the logistics end market. However, JPMorgan forecasts a rebound in growth to 9-10% for the intelligent label sector in 2025.
The upgrade follows a significant restatement in Avery Dennison’s market value. On Thursday, the company’s stock price fell by $10.42 per share, a 5.4% decline, in contrast to a broader market uptick of 0.5%. This drop came after UPS, a major customer of Avery Dennison for RFID tags, announced an expected loss of about half of its daily domestic package volume from its largest customer. This news led investors to sell off Avery Dennison shares in anticipation of the potential impact on its business. The stock now trades near its 52-week low of $179.20, though InvestingPro analysis suggests the company remains slightly undervalued, with additional insights available in the comprehensive Pro Research Report covering 1,400+ US equities.
In response to these developments and considering currency-related headwinds, JPMorgan has adjusted its 2025 earnings per share (EPS) forecast for Avery Dennison downward from $10.20 to $9.95. Despite this revision, the firm sees the recent dip in Avery Dennison’s stock price as an investment opportunity, prompting the upgrade in stock rating. Notable strengths include the company’s 14-year streak of dividend increases and historically low price volatility, as highlighted by InvestingPro’s analysis.
In other recent news, Avery Dennison Corporation disclosed its fourth-quarter results, which slightly missed analyst projections. The company reported an adjusted earning per share of $2.38, falling just short of the anticipated $2.39, with revenue at $2.18 billion, marginally under the projected $2.2 billion. These developments are recent and reflect the company’s performance in the last quarter.
Despite the slight miss on Q4 results, Avery Dennison presented a positive forecast for fiscal 2025, expecting full-year adjusted EPS between $9.80 and $10.20, surpassing the current analyst consensus of $9.44. In 2024, the company achieved 19% earnings growth with adjusted EPS of $9.43, and net sales rose 4.7% to $8.8 billion. Additionally, Avery Dennison returned $525 million to shareholders in 2024 through dividends and share repurchases.
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