Zacks Investment Research upgraded shares of Avon Products Inc. (AVP) from NEUTRAL to OUTPERFORM on June 12, 2013, with a target price of $28.00.
First-quarter 2013 marked the second consecutive earnings beat for Avon, after reporting lower-than-expected earnings in 6 quarters. The second quarterly beat demonstrated that long-awaited growth is sustainable. Moreover, we believe the company's turnaround strategies aimed at accelerating the top-line growth, trimming down costs and improving working capital are paying off, as evident from its improved operating results in the last 2 quarters. We note that the company has been making significant progress in improving the health of the balance sheet by its refinancing activities and is taming costs by slashing jobs and exiting operations in underperforming markets. We also remain optimistic regarding the company's targets of growing top line in the mid-single-digit range and operating margin in the low-double-digit range, while bringing down costs by $400 million by 2016. Consequently, we upgrade our long-term recommendation on Avon to Outperform.
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