) to hold from buy.
Analyst Andrew Shore tells salesforce that despite numerous excuses and outsized spending behind new initiatives, Avon's U.S. business continues to show weakness. He says representative growth is slowing to unacceptable levels and new launches have been abysmal.
Shore says that without the U.S. business, Avon becomes an emerging markets story, with an inherently greater risk profile which doesn't warrant above group valuation. He says the company has a lot of explaining to do on the conference call vis-a-vis its U.S. business to address naysayers who argue a direct-selling model doesn't work in mature markets. He is reviewing Avon's model and target price.