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Avery Dennison earns an upgrade at UBS, shares gain

Published 08/23/2023, 04:01 PM
© Reuters.  Avery Dennison earns an upgrade at UBS, shares gain

UBS upgraded Avery Dennison (NYSE:AVY) to Buy from Neutral and raised its price target to $222.00 from $184.00. As a result, shares gained more than 3% intra-day today.

The firm noted that Avery’s stock price has mostly hovered between $160 and $190 for about two years, but it could move beyond this range driven by anticipated positive year-over-year earnings growth in 4Q23/2024, RFID sales turning back to over 20% growth in 2H23, and stabilization of Base Labels & Ticket/Tag businesses.

UBS expects a 26% growth in the company's EPS for the year 2024. Beyond that, the bank anticipates a steady annual growth rate of 14-15% for the subsequent five-year period.

“Our analysis shows that when AVY's EPS growth moves higher, so does its multiple relative to the S&P 500. This means the stock can re-rate as it delivers a ~14% EPS CAGR post-2024 recovery, higher than AVY's 10% target,” mentioned UBS.

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