Citi raises Avery Dennison stock price target to $191 on solid Q2 results

Avery Dennison (AVY) reported mixed second-quarter results, with adjusted EPS of $2.42 exceeding expectations but revenue of $2.22 billion missing forecasts. Despite the revenue shortfall and challenges in its Intelligent Labels platform, shares gained 1.5% as Citi raised its price target to $191, citing a third-quarter outlook that was "slightly better than feared" driven by sequential improvement in apparel demand and anticipated EBIT growth in the Materials segment.

Analysis

Avery Dennison (AVY) presented a mixed operational picture in its second-quarter 2025 results, reporting an adjusted EPS of $2.42 that surpassed the $2.39 forecast, but missing on revenue which came in at $2.22 billion against an expected $2.24 billion. Despite the revenue miss and noted challenges within its Intelligent Labels platform, the market reacted positively, with shares rising 1.5% post-announcement, supported by a Citi price target increase to $191.00 from $185.00. The analyst's maintained Neutral rating reflects the underlying complexities, but the positive sentiment stems from a third-quarter outlook described as "slightly better than feared." This improved guidance is underpinned by a sequential recovery in apparel demand from April to June, leading management to project the quarter using the more favorable -3% year-over-year June exit rate. Furthermore, the Materials segment is anticipated to resume year-over-year EBIT growth in the third quarter, while the Solutions segment is demonstrating resilience, with new business from CVS and 2026 World Cup branding nearly stabilizing its topline. The company's fundamental strengths, including a 55-year dividend history and a "GOOD" financial health score, provide a stable backdrop to the near-term operational crosscurrents.

Key Decisions for Investors

• Given the conflicting signals of an earnings beat versus a revenue miss, investors should consider the third-quarter outlook as the primary driver of near-term sentiment and monitor for confirmation of the forecasted stabilization in demand.
• The resilience in the Solutions segment, driven by wins with CVS and Embelex, and the expected return to EBIT growth in the Materials segment are key catalysts to watch; any deviation could significantly impact the stock's performance.
• While the company's long-term dividend history and solid financial health provide a defensive cushion, the ongoing challenges in the Intelligent Labels platform and the recent revenue shortfall warrant a cautious, neutral stance until a consistent growth trajectory is re-established.