Mentor, Ohio-based Avery Dennison Corporation (AVY) produces pressure-sensitive materials, and a variety of tickets, tags, labels and other converted products. With a market cap of $16.5 billion, Avery Dennison’s operations span the U.S., Europe, the Middle East, North Africa, Asia, Latin America, and internationally.

Avery Dennison has substantially underperformed the broader market over the past year. AVY stock has gained 1.5% on a YTD basis and 7.8% over the past 52 weeks, lagging behind the S&P 500 Index’s ($SPX) 25.8% gains in 2024 and 31.8% returns over the past year.

Narrowing the focus, AVY has also lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) surge of 23.1% in 2024 and 30.6% over the past year.

Avery Dennison’s stock prices dropped 2.2% after the release of its Q3 earnings on Oct. 23 as the company’s revenues fell short of analysts’ expectations. Avery Dennison reported a 4.1% year-over-year growth in net sales to $2.2 billion which missed analysts’ estimates by a small margin leading to the negative momentum in stock prices.

However, AVY’s Materials and Solutions Groups both recorded an impressive growth in profitability. Driven by higher volume and productivity gains, Avery’s adjusted EPS grew by a notable 9.4% year-over-year to $2.33, outpacing analysts’ expectations. Moreover, its Intelligent Label Solutions has continued to observe another year of strong growth and see significant opportunities ahead. The company’s solutions are gaining more prominence in new categories, particularly in Food, as the value of its technology in helping address key industry challenges continues to resonate with customers.

For the current fiscal year, ending in December, analysts expect AVY to report a staggering 19.2% year-over-year growth in adjusted EPS to $9.42. Moreover, the company has a robust earnings surprise history. It has surpassed analysts’ bottom-line estimates in each of the past four quarters.

AVY stock has a consensus “Moderate Buy” rating overall. Among the 12 analysts covering the stock, seven recommend “Strong Buy,” one advises “Moderate Buy,” and four suggest a “Hold” rating.

This configuration is slightly more bullish than two months ago, when six analysts recommended a “Strong Buy,” and one advised a “Moderate Sell” rating.

On Nov. 18, Truist Financial Corporation (TFC) analyst Keith Hughes reiterated a “Buy” rating on the stock. Meanwhile, AVY’s mean price target of $240.96 represents a 17.5% premium compared to current price levels. The Street-high target of $274.60 suggests a massive 33.9% upside potential.