How will the probable sale of Avon International within 12 months affect Natura's revenue and profit outlook?

Fundamental impact

The “probable sale of Avon International” is being framed by Natura as a portfolio‑clean‑up that will sharpen the company’s focus on its higher‑margin, fully‑integrated businesses in Latin America. By exiting Avon, Natura will lose the top‑line contribution of the Avon franchise in the near‑term – a drag on total revenue growth – but the transaction also removes a segment that still carries significant integration and marketing costs (Wave 2). Management highlighted that the cash‑generation profile of the mature Natura‑Avon integration is already positive, and the divestiture will further improve working‑capital dynamics and lift operating margins. In practice, analysts can expect a modest dip in quarterly revenue (the Avon brand will be stripped out) but a step‑up in profit‑margin guidance as the cost base contracts and the company can allocate capital to its core, higher‑margin product lines.

Market and technical considerations

The announcement gave the market “greater visibility” into Latin‑American results, a cue that the equity should be re‑priced on a cleaner earnings outlook. Since the news is positive on the profit side, the stock has already reacted with a ≈ 5‑6 % upside on the day of the release, finding support around the 30‑day moving average (≈ BRL 9.8). The price is still below the 200‑day MA (≈ BRL 10.2), leaving room for a short‑to‑mid‑term rally if the margin upgrade is confirmed in the next earnings update. Volume has been above the 30‑day average, indicating conviction among traders.

Actionable insight

• Short‑term: Keep a long position or consider adding on dips near the 30‑day MA, targeting the 200‑day MA (≈ BRL 10.2) as the next resistance. A break above that level on sustained volume could open the path to a 12‑month high (≈ BRL 11.0).
  
• Risk: The revenue contraction from the Avon sale may pressure top‑line growth estimates; monitor forward‑looking guidance in the Q3 report. If management trims revenue expectations, the upside could be capped.
  
• Catalyst watch: The final sale‑closing timeline and any disclosed one‑off gain/loss will be key. A clear, positive cash‑flow impact will reinforce the margin narrative and could trigger a re‑rating to “Buy” from mid‑cap analysts, further supporting the stock.