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Deutsche Bank Raises Avon Products’ Price Target to $8 Per Share

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Aug. 8 2016, Published 3:52 p.m. ET

Price movement

Avon Products (AVP) has a market cap of $2.2 billion. It fell by 0.39% to close at $5.06 per share on August 4, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 30.4%, 35.7%, and 24.9%, respectively, on the same day. AVP is trading 24.7% above its 20-day moving average, 26.1% above its 50-day moving average, and 30.8% above its 200-day moving average.

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Related ETFs and peers

The Oppenheimer Mid-Cap Revenue ETF (RWK) invests 0.75% of its holdings in Avon. The ETF tracks a revenue-weighted index of the S&P Mid Cap 400 Index. The YTD price movement of RWK was 10.0% on August 4.

The iShares Morningstar Small Value ETF (JKL) invests 0.35% of its holdings in Avon. The ETF tracks a market-cap-weighted index of US small-cap value stocks. The index stocks from the 90th to 97th percentile of the market-cap spectrum, using fundamental factors.

The market caps of Avon Products’ competitors are as follows:

  • Colgate-Palmolive (CL) — $66.9 billion
  • Estée Lauder Companies (EL) — $34.3 billion

Avon Products’ rating

Deutsche Bank has raised the price target of Avon Products to $8 from $7 per share and maintained the stock rating as a “buy.” TheStreet Ratings rated the stock as a “sell” with a score of “D.”

Performance of Avon Products in 2Q16

Avon Products reported 2Q16 total revenue of ~$1.4 billion, a fall of 8.3% from the total revenue of ~$1.6 billion in 2Q15. Sales of its Beauty and Fashion and Home categories fell by 7.5% and 7.3%, respectively, between 2Q15 and 2Q16.

Revenue from EMEA (Europe, the Middle East & Africa), South Latin America, North Latin America, and Asia Pacific fell by 2%, 12%, 5%, and 10%, respectively, between 2Q15 and 2Q16. The company’s cost of sales as a percentage of total revenue and operating income rose by 0.89% and 6.0%, respectively.

Its net income rose to $33.0 million, and EPS (earnings per share) fell to $0.06 in 2Q16, compared with a net income and EPS of $28.8 million and $0.07, respectively, in 2Q15. It reported adjusted EPS of $0.07 in 2Q16, a fall of 22.2% from 2Q15.

AVP’s cash and cash equivalents and inventories rose by 7.9% and 6.7%, respectively, between 4Q15 and 2Q16. Its current ratio rose to 1.5x in 2Q16, compared with 1.1x in 4Q15. In the next part, we’ll take a look at Ford Motor (F).

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