Why Avon Products Inc. Might Slump in 2014

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Avon Products Inc. slipped nearly 2% today after Bank of America downgraded the beauty-products company from buy to neutral.

So what: Along with the downgrade, analyst Olivia Tong lowered her price target to $18.50 (from $22.50), representing just 9% worth of upside to yesterday's close. While value investors might be attracted to the stock's sharp plunge since October, Tong believes that the stock could remain pressured given her view that management's turnaround will take longer than expected.

Now what: Bank of America remains positive on Avon's long-term prospects, but sees plenty of short-term hurdles ahead. "Growth in AVP's largest market, Brazil, was better than we expected last quarter, but comps are getting tougher," cautioned Bank of America. "Meanwhile, results in several other markets are worsening, most notably North America, and visibility into near-term growth for the company is lacking." Of course, with the stock off more than 30% from its 52-week highs, those near-term concerns might be providing patient investors with a solid buying opportunity.

More compelling ways to grow
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called, "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

The article Why Avon Products Inc. Might Slump in 2014 originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story