Zacks Investment Research upgraded shares of Avon Products Inc. (AVP) from UNDERPERFORM to NEUTRAL on March 13, 2013, with a target price of $21.00.
Based on the company's better-than-expected fourth-quarter 2012 results, we have upgraded our long-term recommendation on Avon to Neutral. The company's total revenue of $2,999.1 million and adjusted earnings per share of $0.37 for the quarter surpassed the Zacks Consensus Estimate of $2,996.0 million and $0.27, respectively. During the quarter, Avon registered a 2% volume growth as well as 1% improvement in active representatives. We believe that Avon's turnaround strategies are promising as evident from its stronger-than-anticipated quarterly results. Further, the company has set a target of achieving top-line growth of mid-single-digit and operating margin of low-double-digit by 2016. However, we remain slightly cautious over the stock as the recent currency devaluation in Venezuela may negatively impact Avon's operational performances. Further, we believe sluggish discretionary spending along with intense competition may undermine Avon's future prospects.
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