## Avery Dennison Beats Earnings Estimates, But Revenue Falls Short: What It Means for Investors
Avery Dennison Corporation (AVY) reported mixed results for the third quarter on Wednesday, delivering a strong performance on earnings per share but missing analyst expectations on revenue. The company’s CEO, Deon Stander, emphasized the positive aspects of the quarter, pointing to “strong earnings growth, above expectations, driven by higher volume and productivity gains.” He highlighted the strength of both the Materials and Solutions Groups, specifically mentioning the impressive growth in the Intelligent Labels segment, which is seeing increased adoption in the Food industry.
The company’s Intelligent Labels technology appears to be resonating with customers in the food sector, as it offers solutions to key challenges within the industry. This positive trend is further evidenced by Avery Dennison’s decision to raise its guidance range for adjusted earnings per share from $9.30 – $9.50 to $9.35 – $9.50 for 2024. This upward revision reflects the company’s confidence in its future performance, despite the slight miss on revenue for the third quarter.
However, while the news of the increased guidance range for adjusted earnings per share is positive, the mixed results have sparked mixed reactions from analysts. JP Morgan’s Jeffrey Zekauskas downgraded Avery Dennison from Overweight to Neutral and lowered the price target from $230 to $210, citing concerns potentially related to the revenue miss. In contrast, BMO Capital’s John McNulty maintained his Outperform rating on Avery Dennison but slashed the price target from $252 to $247, suggesting a more cautious approach.
The diverse reactions from analysts highlight the complexities of assessing Avery Dennison’s future prospects. While the company is seeing success in certain segments, particularly Intelligent Labels in the Food industry, investors are understandably wary of the revenue miss and its implications. Ultimately, the decision of whether or not to invest in AVY stock rests on individual investor analysis and risk tolerance.
Investors looking to make informed decisions should consider factors such as the continued adoption of Avery Dennison’s Intelligent Labels technology, the overall performance of the Materials and Solutions Groups, and the impact of potential economic headwinds on the company’s future performance.
