CEO Andrea Jung has transformed Avon Products (AVP) over the last nine years. The company has grown aggressively in the Beauty products category, especially overseas in developing markets. Management instilled financial discipline in the company through the multi-year supply chain cost reduction program along with the Product Line Simplification (PLS) and Strategic Sourcing Initiatives (SSI). Avon is an above-average growth company among its peers, but there are inherent risks associated with the direct sales business model and the dependence on developing markets for growth. The annualized cost savings associated with Product Line Simplification (PLS) initiative and Strategic Sourcing Initiative (SSI) are above expectations. The target price of $36.25 is based on a 22 P/E on trailing 12-month earnings. The Buy rating is maintained. Zacks Investment Research

Avon Products, Inc.Â’s (AVP) CEO Andrea Jung has transformed the company over the last eight years. It has grown aggressively in the Beauty products category, especially overseas in developing markets.

The management instilled financial discipline in the company through the multi-year supply chain cost reduction program along with the Product Line Simplification (PLS) and Strategic Sourcing Initiatives (SSI). The companyÂ’s strong second-quarter results drove the stock to our price target; as a result, the rating has been lowered to a Hold.

While the mature core North American market has been weak, Avon has a large exposure to the economies in Latin America that are prone to hyperinflation and currency devaluations. Japan also continues to be challenging. Moreover, Higher advertising, restructuring, and incentive expenditures along with the aggressive share repurchase program are increasing AvonÂ’s debt position.

Avon Products stock has traded in a P/E range of 14 to 31 over the last

...