Avery Dennison Corporation (AVY): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Avery Dennison reported adjusted earnings of $0.80 per share in the second quarter of 2014, up 12.7% year over year. The results beat the Zacks Consensus Estimate by a penny. Avery raised its full-year 2014 outlook for adjusted earnings per share from the range to $3.00 $3.10. The company expects to incur cash restructuring costs of $50 million in 2014. Avery will continue to benefit from product introductions and growth in emerging markets. However, inflationary raw materials costs and the loss-making medical business remain concerns. Thus, we reiterate our Neutral recommendation on Avery Dennison with a target price of $52.

Overview:

Headquartered in Pasadena, California, Avery Dennison Corporation (AVY) produces pressure-sensitive materials, and a variety of tickets, tags, labels and other converted products. Avery operates over 180 manufacturing and distribution facilities in more than 60 countries. Its products are sold under the Avery, Avery Dennison, Avery Graphics and Fasson brands. Its clientele is spread across the U.S., Europe, Asia, Latin America and other regions. Avery runs three major business units:

The Pressure-Sensitive Materials unit (PSM) (74% of total revenue in the first quarter of 2014) primarily manufactures and sells pressure-sensitive roll materials, graphics and reflective materials, and water and solvent-based performance polymer adhesives and engineered films.

The Retail Branding and Information Solutions (RBIS) unit (25%) provides a wide variety of information and brand management solutions for apparel manufacturers, retailers, distributors and industrial customers on a worldwide basis, including tag and label design and printing, heat transfers, patches and specialty trim, eco-friendly solutions, packaging and security solutions, RFID (radio-frequency identification) solutions, supply chain solutions and Web services as well as barcode printers, software solutions, molded plastic fasteners and application devices.

Vancive Medical Technologies unit (1%) is a producer of medical products and solutions. This business manufactures a wide range of pressure-sensitive adhesive products for surgical, wound care, ostomy and electromedical applications. These products are sold primarily to medical supply and device manufacturers and healthcare providers.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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