Avon Technologies – following recent upgrades, this protection products group’s shares are looking appealing, now at 1385p, brokers TP 1800p

10.04.2025

It could well pay investors to take a view upon the share price recovery of the £429m-capitalised Avon Technologies (LON:AVON) between now and when the group reports its results on Wednesday 21st May.

The Business

For Armies, Navies, Law Enforcement and First Responders, Avon is the leading provider of mission-critical personal protection, with its world-leading respiratory and head protection portfolios.

With over 900 employees, the group which is based at Melksham in Wiltshire, has six sites across North America and the UK, the supplying its products to customers in over 70 countries globally.

The group is split into two main divisions – Avon Protection, and Team Wendy.

Avon Protection, with sites in Michigan in the US and in Wiltshire and Dorset in the UK, has an extensive history of providing respiratory protection and a comprehensive knowledge of its customers' requirements for respirators, powered and supplied air systems, filters, spares and accessories, as well as underwater systems and CBRN protective wear.

Recent orders from the UK Ministry of Defence, UK Police, the US Department of Defense, NATO, Swedish Police, the Australian Defence Force and those in Germany and New Zealand.

Team Wendy, with its sites in California, New Hampshire and Cleveland in the US, has a deep understanding of traumatic brain injury, which enables it to design next-generation ballistic and bump protection helmets, as well as helmet liner and retention systems.

Recent orders from the US Army, US DOD, the US Navy, and the US Air Force, as well departments in Australia.

Recent First-Half Trading Update

On Wednesday, 26th March, the group provided investors with an update on trading for the first six months of the financial year and an upgrade to full-year expectations.

It noted strong trading momentum over the six months to end-March, guiding to expect good growth over the prior year, while suggesting that revenue growth for the full year is now going to be higher than previously expected.

For the full year it has guided that revenues will now be some 10% higher than previously guided, while operating profit margins will be above 12% against the guided 11.5%.

Management Comment

"We are proud of the contribution that Avon continues to provide to the security of NATO nations.

The additional orders for provision of respiratory protection to Ukrainian war fighters and rebreathers for military divers allows both users to operate with confidence, knowing they are protected against increasingly prevalent threats in the harshest and most demanding environments.

We continue to deliver in accordance with our STAR strategy. 

Our growing order book, progress closing our California facility and the culture, capability change and pace we are seeing as we implement continuous improvement across the Group all give us confidence for the medium term and beyond."

The Equity

There are some 31m shares in issue, some 84.85% of which are held by institutional investors.

The larger holders include Alantra EQMC Asset Management (18.12%), Aberdeen Investment Management (5.06%), Ancora Alternatives (4.97%), Schroder Investment Management (4.69%), Van Lanschot Kempen Investment Management (3.97%), Aberforth Partners (3.94%), Royal London Asset Management (3.83%), NFU Mutual Investment Services (3.57%), Invesco Asset Management (3.03%) and Norges Bank Investment Management (2.83%).

Analyst Views

Some six analysts follow this group quite closely, with the consensus view being that the shares are likely to Outperform, with two rating Buy, while four rate Hold.

The consensus average Target Price is 1614p, the highest 1800p and the lowest 1440p.

For the current year the analyst estimates suggest $31.6m pre-tax profits, generating 82.7c earnings and paying a 26.5c per share dividend.

At Jefferies, its analyst Andy Douglas has a Buy recommendation out on the stock, with a Target Price of 1745p a share.

Barclays recently raised its Target Price on the shares to 1610p (1550p), with an ‘Equal Weight’ rating.

Analyst Robin Byde, at Zeus Capital, has a Hold out on the group’s shares, but has lifted his Target Price from 1450p to 1500p.

His estimate for the current year to end-September is for revenues of $305.3m ($275.0m), with adjusted pre-tax profits of $31.4m ($25.3m), with earnings of 80.3c (67.6c) and paying a dividend of 25.6c (23.3c) per share.

For next year, he sees $326.4m sales, $34.2m profits, 85.3c earnings and paying a 28.1c dividend.

In My View

This group has endured quite a set of hassles over the last couple of years but now seems to be getting it right again.

I see its shares, which touched 1558p early last month, yesterday they fell to 1342p before recovering somewhat to now be trading at around 1385p, from which level I see a healthy upside, Trump Tarriffs or not.