Barclays has revised its price target for Avery Dennison (AVY, Financial), lowering it to $210 from a previous $225, while maintaining an Overweight rating on the stock. The decision follows Avery Dennison's first-quarter earnings report, which prompted a shift towards providing guidance for the upcoming quarter. The adjustment reflects ongoing concerns related to tariffs and uncertainties in the apparel sector.
Despite these near-term challenges, the financial firm suggests that Avery Dennison's current share price presents a strategic entry opportunity for long-term investors interested in a "quality compounder." This perspective highlights the company's potential for steady growth despite the prevailing risks to earnings and its overall growth trajectory. Investors are advised to consider these factors when evaluating their investment strategies in the context of broader market conditions.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 11 analysts, the average target price for Avery Dennison Corp (AVY, Financial) is $201.96 with a high estimate of $236.00 and a low estimate of $169.56. The average target implies an upside of 18.63% from the current price of $170.25. More detailed estimate data can be found on the Avery Dennison Corp (AVY) Forecast page.
Based on the consensus recommendation from 14 brokerage firms, Avery Dennison Corp's (AVY, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Avery Dennison Corp (AVY, Financial) in one year is $196.32, suggesting a upside of 15.31% from the current price of $170.25. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Avery Dennison Corp (AVY) Summary page.
AVY Key Business Developments
Release Date: April 23, 2025
- Adjusted Earnings Per Share (EPS): $2.30, up 4% excluding currency translation compared to prior year.
- Organic Sales Growth: Up 2%, driven by higher volume and partially offset by deflation-related price reductions.
- Adjusted EBITDA Margin: 16.4%, up 10 basis points compared to prior year.
- Free Cash Flow: Approximately negative $50 million, in line with expectations.
- Net Debt to Adjusted EBITDA Ratio: 2.3 at quarter end.
- Shareholder Returns: $331 million returned through share repurchases and dividends, reducing share count by 2.3 million shares.
- Materials Group Sales: Up 1% ex-currency and on an organic basis.
- Solutions Group Sales: Up 5% on an organic basis.
- Enterprise-wide Intelligent Labels Sales: Up mid-single digits in the first quarter.
- Materials Group Adjusted EBITDA Margin: 17.7%, down 60 basis points compared to prior year.
- Solutions Group Adjusted EBITDA Margin: 17.2%, up 110 basis points compared to prior year.
- Second Quarter EPS Guidance: Expected to be in the range of $2.30 to $2.50.
- Currency Translation Impact: Anticipated $7 million headwind to operating income for the full year.
- Restructuring Savings: Expected to be more than $45 million for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Avery Dennison Corp (AVY, Financial) delivered a strong first quarter with earnings per share up 4% ex-currency, in line with expectations.
- The company experienced strong growth in high-value categories, particularly in graphics, reflective solutions, and industrial tapes.
- The Solutions Group saw strong top-line growth and margin expansion, driven by growth in the base business and high-value solutions.
- Enterprise-wide Intelligent Labels grew mid-single digits on an organic basis, with strong growth in apparel and food categories.
- Avery Dennison Corp (AVY) maintains a strong balance sheet with a net debt to adjusted EBITDA ratio of 2.3, providing investment flexibility.
Negative Points
- Macro uncertainty is elevated due to an evolving trade policy environment and reduced global GDP growth outlooks.
- The company faces potential impacts from recent tariff changes, which could affect material purchases and macro demand.
- Apparel growth is expected to decline mid-single digits in the second quarter due to tariff-related sourcing and pricing challenges.
- Free cash flow was negative $50 million in the first quarter, in line with historical patterns but still a concern.
- The logistics segment experienced a decline, partially offsetting growth in other areas, and no large-scale rollouts are expected in 2025.
