Berenberg slashes target price on Avon Rubber amid 'a year to forget'

Analysts at Berenberg slashed their target price on safety equipment supplier Avon Protection from 2,955.0p to 1,740.0p on Thursday after the group cut its full-year guidance by roughly 40%.

Berenberg stated that if 2020 was "a year to remember" for Avon Protection, then the 2021 trading year had certainly been "a year to forget".

With several challenges coming to the fore, Avon "materially downgraded" its full-year 2021 and full-year 2022 guidance and while Berenberg noted that if its full-year 2023 numbers can be achieved, the stock still trades at "an undemanding" 16.5x price-to-earnings ratio for a 4.0% free cash flow yield.

However, the German bank said it was still seeking greater clarity that these earnings will be delivered before turning more positive.

"As a result, we maintain our 'hold' rating with Avon remaining a least preferred name for 2021," said Berenberg.