NEW YORK (TheStreet) -- Shares of Avon Products (AVP) are down 1.6% to $9.25 in pre-market trading after BMO Capital Markets downgraded the company to "underperform" from "market perform" and lowered its price target to $7 from $10.
"We have lowered our rating primarily owing to the rising risk tied to FX weakness in emerging markets, Russia's response to its currency crisis, and the impact of AVP's debt covenants on its flexibility for any potential cash restructuring charges after December 31, 2014," BMO Capital Markets said.
Analysts also warned that Avon, which manufactures and sells beauty and home products direct-to-consumer, may need to raise prices significantly to offset currency weakness at a time when consumers, in the midst of a credit crunch, have less money to spend.
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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 several weaknesses, 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 generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself."