Topeka Capital Upgrades Avery Dennison (AVY) to Buy

Topeka Capital upgraded Avery Dennison (NYSE: AVY) from Hold to Buy with a price target of $58.50 (from $54.00).

Analyst Chris Kapsch said, "Given tumultuous energy markets and uncertainty surrounding Asia (particularly China) and Europe, investors with industrials exposure may be served well to gravitate towards stocks with defensive characteristics."

"Considered by many a packaging company, AVY fits that bill. We had constructive takeaways following a recent AVY management meeting, and now we have also gleaned that domestic PSM demand has picked up (only partly seasonally driven), which should buttress AVY’s 4Q14 results. AVY's PSM margins could also improve from lower petrochem-derived feedstock costs, likely in 2015, and both segments could indirectly benefit from lower energy costs, with consumers having more discretionary income available for spending on both consumer staples (often with AVY labels attached) and/or apparel purchases. Considering better/improving fundamentals and given our assumption investors gravitate towards less volatile stocks, AVY's valuation should benefit," he added.

For an analyst ratings summary and ratings history on Avery Dennison click here. For more ratings news on Avery Dennison click here.

Shares of Avery Dennison closed at $50.22 yesterday.

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