Avon Products, Inc. (AVP) - Bear of the Day
September 23 2012 - 8:00PM
Zacks
Avon Products, Inc.'s (AVP) second-quarter 2012 earnings of
$0.20 per share missed the Zacks Consensus Estimate by a penny and
plummeted 59% year over year. Moreover, the company's net sales
dipped 9%, reflecting a fall of 4% in total units. The
disappointing result was primarily due to sluggish performance at
each of the company's regions where it operates, along with
increased input costs and operating expenses.
We believe the company's initiatives to change the product and
price mix, improve earnings and reposition the business in the U.S.
market will require significant advertising and promotional
expenditures, which may weigh upon its margins. Further, we believe
sluggish discretionary spending along with intense competition and
exposure to foreign currency may undermine the company's future
prospects.
Currently, we maintain a long-term Underperform recommendation
on the stock. Our long-term Underperform recommendation on the
stock indicates that it would perform below the broader market. Our
target price of $15.00, 18.1x 2012 EPS reflects this view.
AVON PRODS INC (AVP): Free Stock Analysis Report
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