Avon Protection Share Price Forecast August 2021 – Time to Buy AVON?

Shares of Avon Protection (LSE: AVON) are in the red today, down by more than 1% to 1975p as of August 18^th (19:05 UTC+1). AVON shares crashed last week with its share price declining by almost 30% after the company released its trading update. 2021 has been a rocky year for the shares as they have been down by 40% over the past 12 months. But is this dip in prices a buying opportunity for investors? Let’s find out.

Avon Protection – Technical Analysis

Avon Protection’s financial statement indicates that the market cap of the country is at £606.095 million with total assets worth £308.11 million. Avon Protection’s revenue for 2020 was at £168 million with a profit margin of 4.17% compared to revenue of £128.40 million in 2019.

Moving averages for Avon Protection such as Exponential Moving Average (100)(2837), Simple Moving Average (100)(2924), Exponential Moving Average (200)(3014) and Simple Moving Average (200)(3188) are pointing towards a sell action.  Oscillators such as Average Directional Index (14)(29) and  Awesome Oscillator(−316) are pointing towards a neutral action.

Recent Developments

Avon Protection released a progress update last week which looked to be pretty decent at first glance. Because of continued demand, the company achieved an order intake of $221 million over the 10 months ending in July, a 13% increase compared to a year ago. This has been factored into its share price as well. However, on further examination, analysts found that not everything is running smoothly in the company. Labour shortages in the United States as a result of the pandemic has disrupted the company’s supply chain in addition to delayed receipt payments. Additionally, around $22 million worth of income is expected to be delayed despite the management’s continuing efforts.

Avon Protection’s defence business has made adjustments to its revenue guidance for 2021, which they have set between $245 million to $260 million which is much lower than what analysts predicted ($282 million). Management also believes that these disruptions can continue into 2022 which will result in another cut in revenue guidance for the next year as well.

Before the crash, AVON shares were gaining momentum as it was up by almost 20% since the middle of July, bolstered by the positive financial results reported in its interim results for FY21. Order received also grew to £167.9 million with revenue increasing by 41% since March 2020 to reach £122 million.

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Should You Buy AVON Shares?

Despite the number of disappointing developments as mentioned above, investors may be overreacting. While the decreased guidance isn’t good news, missing revenue isn’t lost but delayed. Also, the problem occurred due to macroeconomic factors beyond the firm’s control and not the business itself. These disruptions should naturally resolve themselves as the pandemic comes to a close, paving the way for Avon protection and its share price to deliver its historical growth.

According to statements from the company, Avon Protection said that this won’t have any effect on its FY23 expectations which means that there is no long-term destructive element that will arise from this event. The company has also made progress in delayed product approvals as reported in a contract update.  This is one of the reasons why investors should consider jumping on this opportunity.

Considering the quality of financials produced by the company, its quite a surprise that its share price has dropped so drastically. Although the outburst from the investors was caused by the delay, investors should monitor AVON prices, for now, to look for a possible future investment.

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