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Investing.com - Canaccord Genuity maintained its Hold rating and $4.00 price target on Coty Inc. (NYSE:COTY), currently trading at $4.15, following meetings with the company’s senior management in New York. According to InvestingPro data, the stock has seen significant volatility, falling over 40% year-to-date.
The investment firm met with Coty CEO Sue Naby and CFO Laurent Mercier, who emphasized their strategic focus on the company’s prestige business segments, including fragrance and skin care, which offer higher growth and profit potential. The company maintains impressive gross profit margins of 64.8%, according to InvestingPro analysis.
Coty management discussed their recently announced strategic review of the consumer business, recent debt refinancing efforts, and their product range spanning price points from $5 to $500.
The company is currently evaluating strategic alternatives for its $1.2 billion mass color cosmetics business and $400 million Brazilian brands business, which is described as highly profitable.
Canaccord noted that potential future asset sales could help Coty strengthen its balance sheet, and the investment firm believes a sale of Wella could be forthcoming, though they maintain that work remains to reposition the company for profitable growth.
In other recent news, Coty Inc . has launched a private offering of senior notes to refinance its existing debt. The company announced that the terms of these notes will be determined at pricing and will remain senior unsecured obligations as long as they hold investment-grade ratings. Meanwhile, Coty faced several analyst downgrades, with Berenberg reducing its stock rating from Buy to Hold due to concerns about delayed sales growth recovery. TD Cowen also lowered Coty’s price target to $4.00, citing inventory destocking challenges, while Wells Fargo adjusted its target to the same figure based on valuation concerns.
Coty’s financial performance has been under scrutiny, with the company missing earnings expectations for the fourth quarter. It reported a loss of 5 cents per share, contrasting with analysts’ predictions of a 1 cent gain. Like-for-like sales fell 9% year-over-year, impacting both its Prestige and Consumer Beauty segments. Additionally, S&P Global Ratings revised Coty’s outlook to negative, highlighting the company’s rising leverage, which has exceeded the downside threshold of 4x. Despite previous success in reducing leverage, Coty has struggled with macroeconomic pressures and specific challenges in the U.S. market.
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