We have maintained our Neutral recommendation on Avery Dennison
with a target price of $52.00. Avery's adjusted earnings improved
44% year over year to $0.69 in the fourth quarter of 2013. Avery
expects its full-year 2014 adjusted earnings in the range of $2.90
to $3.20 per share. Avery will benefit from its strong cash flow.
With the divestiture of the underperforming Office and Consumer
Products unit, Avery Dennison will be able to focus on its core
segments and increase its growth profile. Furthermore, share
repurchases will also provide a boost to Avery's earnings. However,
the uncertain macroeconomic environment remains a headwind.
Headquartered in Pasadena, California, Avery Dennison
Corporation (AVY) produces pressure-sensitive materials, office
products and a variety of tickets, tags, labels and other converted
products. Avery operates over 200 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 (73% of total revenue in
third quarter of 2013) 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 unit (26%)
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.
The Other Specialty Converting Businesses unit (1%) comprises
the industrial and automotive products business, performance films,
business media, radio frequency identification (RFID) and the
security printing business. These businesses manufacture and sell
specialty tapes, highly engineered films, RFID inlays,
pressure-sensitive postage stamps and other converted products.
Avery Dennison has divested its Office and Consumer Products
unit. The segment has been classified as discontinued
Avery Dennison Corporation (AVY): Read the Full
AVERY DENNISON (AVY): Free Stock Analysis
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