Jefferies Starts Avon Products (AVP) at Buy

Jefferies initiates coverage on Avon Products (NYSE: AVP) with a Buy rating and a price target of $7.00.

Analyst Trevor Young commented, " Buying Avon early in its three-year transformation takes a leap of faith, particularly amid an opaque S-T financial outlook. Despite this, we like management's explicit list of priorities for '16 as it lays a road map to reach its very achievable L-T targets. We see a clear path to ~10% adj. EBITDA margin by '18 as AVP implements some selfhelp (a $350m supply chain/overhead cost savings plan, with $70m targeted in '16). Our 2016-2018 scenario analysis points to -20% potential downside vs. +200% potential upside, and our base case suggests the stock could more than double by the end of '17, as topline growth and margin expansion are rewarded with modest multiple expansion. Cerberus' purchase of the NA business in March bolsters the balance sheet, and should alleviate cash concerns. Significant risks (execution, FX, tax) remain and we expect the stock to be volatile, but the favorable risk/reward profile has us positive on the name."

For an analyst ratings summary and ratings history on Avon Products click here. For more ratings news on Avon Products click here.

Shares of Avon Products closed at $4.01 yesterday.

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