Avery Dennison heads into its Tuesday earnings release with the Street meaningfully divided on valuation — even as short sellers and options traders both continue to ease off.
The most interesting development since the last published note is a sharpening split among analysts in the final days before the print. BofA raised its target to $210 from $202 this week, maintaining its Buy. Truist moved in the opposite direction — cutting to $209 from $221 while holding its Buy rating — a signal that the bullish case is narrowing even for those who remain positive. Citigroup nudged its Neutral target marginally lower to $184, a level that sits 15% below the current price of $160.41. The consensus mean of $199.60 implies roughly 24% upside from here, but the gap between the most optimistic and most skeptical targets is wide. Bulls point to the RFID-driven expansion in the Solutions segment, logistics and food sales running up approximately 15%, and the CVS partnership delivering double-digit growth. Bears focus on the downward revision to near-term EPS, pressure on apparel volumes, and EBITDA trending below earlier expectations.
Short positioning has settled since the sharp 8% weekly drop noted in the prior article, with SI now holding near 3.25% of free float — modest by any measure. That reading has barely moved in the past week, confirming that the rapid exit of earlier July has stalled rather than continued. Borrow conditions remain extraordinarily relaxed: availability runs near 2,983%, meaning the lending pool is many multiples larger than the shares currently borrowed, and cost to borrow is a low 0.45%. The short score of 36.5 has also drifted lower through the week after sitting closer to 38 in early July. None of this points to meaningful short-side pressure on the print.
Options positioning has continued to ease. The put/call ratio of 4.02 is still elevated on an absolute basis, but it remains well below the 20-day mean of 5.34, roughly 0.8 standard deviations lighter on hedging demand than has been the recent norm. The PCR has fallen steadily from above 9 in late June — a directional shift that reflects diminishing demand for downside protection rather than an outright bullish tilt. AVY's packaging peers posted a mixed week: CCK and ATR each gained more than 5%, while OI fell roughly 6%, illustrating how individual results are driving divergent outcomes across the sector.
The Tuesday print will test whether AVY's RFID and intelligent labels growth is sufficient to offset the apparel softness and EPS revisions that have kept the more skeptical analysts anchored well below the current consensus target.
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