Avon shares fall on analysts’ downgrade

By Simon Pitman

- Last updated on GMT

Avon shares fall on analysts’ downgrade

Related tags Stock

Avon Products stocks have hit a 52-week low following less than favorable outlooks by a number of leading analysts covering the beauty industry.

The company’s share price fell to the new low of $8.55 on Tuesday to close the day’s trading on the New York Stock Exchange at $8.61.

Just before Christmas, BMO Capital made the boldest statement, downgrading the stock to ‘underperform’ from ‘market perform, while also lowering its price target from $10 to $7.

Investment world gets the jitters

Meanwhile, Citigroup maintained its ‘neutral’ rating but lowered its price target from $11 to $10, while Piper Jaffrey started coverage of the company with a neutral rating and a $9 price target and Bank of America cut its price target for the company from $12 to $11.

One analyst has rated the stock as a sell, while eight have given a hold rating and three have assigned it with a buy rating, according to the most recent analysts’ poll from Thomson Reuters.

The company also has a consensus rating of ‘hold’ and a consensus target price of $13.32.

Avon’s revenues cause for concern

For its most recent third quarter, the company turned a loss in the corresponding period last year into a profit, but revenues slipped significantly.

The company made progress in its turnaround bid by posting third quarter net income attributable to the company of $91.4 million, versus a loss of $5.5 million a year earlier.

But the company battled adverse currency translations, posting a total revenue of $2.1 billion for the third quarter, an 8% decrease, but an increase of 1% in constant dollars. Beauty sales declined 9%, but increased 1% in constant dollars.

"We began the year with the expectation that the second half of 2014 would show improvement relative to the first half and Avon's third-quarter results are consistent with modest improvement on both top and bottom line,"​ said Sheri McCoy, Chief Executive Officer of Avon Products.

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