Avon Products Faces A Lengthy Turnaround

"Despite valid positives, quality of growth prevents full optimism," Powers wrote in a note.

Powers is concerned with the company's troubles in its end markets, rising competition and the "disappointing" -2 percent unit volume performance in the second quarter.

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However, the analyst raised his EPS estimate for 2016 and 2017 to reflect the second quarter results, and a mark-to-market on FX. Powers now estimate 2016/2017 EPS of $0.20/$0.39 (versus $0.18/$0.32 prior) and organic growth of 3.5 percent/2.6 percent (vs. 3.2 percent/2.8 percent prior).

"While such upward revisions are indeed encouraging, we remain cautious regarding a full turnaround success at AVP — noting that significant macro, competitive, and executional downside risks remain as hurdles," Powers added.

That said, the analyst raised the price target to $4 from $3.

At time of writing, shares of Avon surged 8 percent to $5.16.

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