NEW YORK (TheStreet) -- J.P. Morgan (JPM) upgraded Avery Dennison Corp. (AVY) to "overweight" from "neutral" on Friday based on a valuation call, the company's growth in emerging markets and consistent free cash flow.
The firm raised its price target on the company, which is engaged in the production of pressure-sensitive materials, to $58 from $52.
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TheStreet Ratings team rates AVERY DENNISON CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AVERY DENNISON CORP (AVY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, increase in net income, revenue growth and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- AVERY DENNISON CORP has improved earnings per share by 10.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AVERY DENNISON CORP increased its bottom line by earning $2.43 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($3.05 versus $2.43).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Containers & Packaging industry average, but is less than that of the S&P 500. The net income increased by 23.2% when compared to the same quarter one year prior, going from $57.80 million to $71.20 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- You can view the full analysis from the report here: AVY Ratings Report