NEW YORK (TheStreet) -- Avon Products (AVP) - Get Report stock is soaring 9.12% to $3.11 on Tuesday after analysts at Citigroup upgraded the beauty products manufacturer to "buy" from "neutral" and raised their price target to $5 from $3.50.
Analysts are more bullish after visiting the company's operations in Brazil.
The company is expected to share more positive news during its Investor Day on January 21, the firm noted.
Overall, Avon's core business is stabilizing and the company is projected to reinvest funds to accelerate growth, analysts added.
Some headwinds include currency devaluations in Brazil and Argentina, which may impact Avon's 2016 earnings.
Separately, TheStreet Ratings team rates AVON PRODUCTS as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate AVON PRODUCTS (AVP) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Personal Products industry. The net income has significantly decreased by 862.6% when compared to the same quarter one year ago, falling from $91.40 million to -$697.00 million.
- Net operating cash flow has significantly decreased to $13.20 million or 90.06% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 71.80%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 852.38% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- AVON PRODUCTS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AVON PRODUCTS reported poor results of -$0.88 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus -$0.88).
- The gross profit margin for AVON PRODUCTS is rather high; currently it is at 63.33%. Regardless of AVP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AVP's net profit margin of -41.81% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: AVP