Avon Products, Inc. (NYSE:AVP) Jumps on Upgrade, New Business Plans

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Beauty care products manufacturer and marketer Avon Products, Inc. (NYSE:AVP) shot up 6.95% on Tuesday, closing at $6.62, with 17.03 million shares traded.

The stock has been on an uptrend since July 29 when it broke out through the three moving averages on high-volume and closed above the $4 mark.

Yesterday’s trading also reflected high investor interest considering volume was over three times the stock’s average volume of 5.14 million shares.

Avon Products, Inc. (NYSE:AVP) upgraded by analyst

Analysts at Zacks Investment Research upgraded the company from a Hold rating to a Buy rating.

The analysts currently have a $6.75 price target on the stock, and said: “Avon’s efforts towards improving pricing, lowering costs, building brand strength and boosting Active Representatives are finally starting to pay-off. The company, which had been battling waning top and bottom lines due to currency headwinds and a highly leveraged balance sheet, made a comeback in second-quarter 2016 with better-than-expected top- and bottom-line results. This marked the company’s first earnings beat in the last four quarters.”

Avon Products, Inc. (NYSE:AVP) Q2 results

Avon Products reported Q2 EPS of $0.07, which beat by $0.05, and revenue of $1.43 billion, which beat by $20 million even though it was down 8.3% year-on-year.

The company attributed the improved performance to its Transformation Plan, and said that its performance improved in nine out of top 10 markets in terms of local currency.

“I’m encouraged that we are making steady progress on a number of fronts, including pricing, driving additional cost side of the business and continuing to build the Avon brand and enhance the representative experience,” said Sheri McCoy CEO and director. “The changes we’ve made to the operating model are settling in, giving us greater connectivity between corporate and the critical market.”

The company clarified on Brexit, say that its UK business may not suffer any significant long-term impact considering euros and the British Pound only constituted 10% of Avon’s overall revenue.

Avon Products, Inc. (NYSE:AVP) venturing into the health and wellness sector

Another catalyst for yesterday’s jump in price was the announcement October 17 that Avon will expand its market base with a foray into the health and wellness segment. The new business line will be in addition to its current segments of beauty, fashion and home products.

It is expected that the new business will benefit from cross selling amongst Avon’s existing clientele.

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