BMO Capital on Friday increased its 12-month price objective for Avery Dennison (NYSE:AVY) to $224.00 from $215.00, while maintaining an Outperform rating on the materials science company. Avery Dennison, which has a market capitalization of $15 billion, is trading near a 52-week high of $196.
The research firm cited expectations that earnings per share will "inflect/reaccelerate" in 2026 and 2027 following what it described as a challenging 2025 for the manufacturing and materials business. BMO identified a set of drivers it believes will underpin that recovery.
Among those drivers, BMO highlighted solid and accelerating growth in Avery Dennison’s IL platform. The firm also pointed to the impact of earlier capital deployment through mergers and acquisitions and share repurchases, noting that those moves should support improved performance. In addition, BMO said the company faces comparatively easier year-over-year comparisons that could help reported growth appear stronger in the back half of the forecast horizon.
InvestingPro data show Avery Dennison trading at a price-to-earnings ratio of 21.98. BMO and the InvestingPro reference note that this valuation is relatively rich when compared with the company’s near-term earnings growth prospects.
The analyst note also flagged the potential for upside if apparel production and consumption normalize after disruptions tied to tariff impacts. That eventual normalization is identified as another catalyst for improved company results.
BMO expressed confidence in Avery Dennison’s execution focus, favorable secular trends, and enlarged cash flow flexibility, arguing these elements should put the company on a path toward better growth and a potential valuation re-rating.
In related financial reporting, Avery Dennison released fourth-quarter 2025 results that showed adjusted earnings per share of $2.45, above analysts’ consensus of $2.40. Revenue for the period came in at $2.15 billion, below the expected $2.29 billion. Despite the revenue shortfall, the earnings beat was received positively by investors.
The update noted that management has been an active buyer of shares, a factor InvestingPro tips flag as supportive of the firm’s outlook. Recent analyst commentary about Avery Dennison’s financial position and competitive standing has not been detailed in the latest public updates, leaving some elements of market reaction and longer-term analyst sentiment unspecified.
What this means for markets
- Equities - The target increase and maintained Outperform rating signal analyst confidence that earnings will recover and could support share price upside.
- Materials and manufacturing - Expectations of renewed EPS growth and IL platform momentum point to potential improvement in segment-level performance.
- Apparel and consumer supply chains - Normalization in apparel production and consumption is cited as a possible tailwind if tariff-related distortions ease.
Investors and market participants will likely weigh the combination of an earnings beat on the EPS line, a revenue miss, and the analyst upgrade when assessing near-term prospects for Avery Dennison. The company’s trajectory will remain tied to execution on growth initiatives, the pace of apparel market normalization, and how capital allocation choices translate into sustained cash generation.