MergerTalk: Natura & Co/Avon Products -"Ding Dong, The Avon Spread Calling"

Lane Research

Douglas Lane

Independent Insight Provider

Lane Research is a boutique fundamental equity research firm focusing on companies that employ a direct to consumer business model. This is an area where we have had extensive experience over the years, going back to the mid-1990s when Amway Asia Pacific, Amway Japan and Nu Skin originally listed on the New York Stock Exchange. We think Direct Selling in particular supports many favorable consumer macro-trends such as leveraging today’s technology to advance social selling and workplace flexibility, and the move towards shopping away from a fixed retail location. Our proprietary financial modeling coupled with our decades of experience and contacts within this unique business model leave us well positioned to provide alpha to investors interested in the space. Lane Research does not have any trading or investment banking operations, fully aligning our objectives with our clients.

Experience includes:

-9 equity analyst awards, including Starmine's #2 stock picker in 2011 for Household Durables & #1 earnings estimator in 2010 for Personal Products, and The Wall Street Journal's #1 stock picker in 2004 & 2006 for Household Products. 

-Financial TV appearances including CNBC and Bloomberg

-Quotes in financial publications such as Wall St Journal, Investors Business Daily and Barron's, and newswires such as Reuters and the Associated Press

-Chartered Financial Analyst since 1992 and member of the CFA Society Boston

-FINRA Series 7, 63, 86 & 87

Equity Bottom-Up

<p>We recently moved to a Buy rating on <a href="https://www.smartkarma.com/entities/4527" target="_blank" data-smartkarma-citation="entities:4527:1">Avon Products (AVP US)</a> from a Hold as we believe new management is on the right track in getting the company growing again, although admittedly it’s in the very early stages of a multi-year effort.  Our initial expectation is for the stock to move from its recently depressed valuations (please see <a href="https://www.smartkarma.com/insights/sector-analysis-direct-selling-stocks-are-sharply-outperforming-broader-averages-this-year" target="_blank" data-smartkarma-citation="insights:24845">Sector Analysis: Direct Selling: Stocks Are Sharply Outperforming Broader Averages This Year</a>) more towards historical averages as the company begins to execute on its turnaround strategy.   </p>

We recently moved to a Buy rating on Avon Products (AVP US) from a Hold as we believe new management is on the right track in getting the company growing again, although admittedly it’s in the very early stages of a multi-year effort.  Our initial expectation is for the stock to move from its recently depressed valuations (please see Sector Analysis: Direct Selling: Stocks Are Sharply Outperforming Broader Averages This Year) more towards historical averages as the company begins to execute on its turnaround strategy.   

Avon Products: This Week’s Earnings 2-Minute Drill