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Investing.com - TD Cowen has lowered its price target on Coty Inc . (NYSE:COTY) to $4.00 from $5.00 while maintaining a Hold rating, citing inventory destocking and reset challenges. The stock, currently trading at $3.81, is near its 52-week low of $3.75, with InvestingPro data indicating oversold conditions.
The beauty company missed earnings expectations for the fourth quarter, reporting earnings per share of -5 cents compared to the Street’s estimate of +1 cent. Like-for-like sales declined 9% year-over-year, with Prestige segment sales down 7% and Consumer Beauty sales falling 12%. Despite challenges, the company maintains impressive gross profit margins of 64.8%, according to InvestingPro data.
TD Cowen noted that Coty’s fiscal year 2026 guidance is weighed down by tariffs, which are expected to impact the company by $50-55 million, along with ongoing inventory resets. The firm projects low-single-digit sales growth in the second half on easier comparisons and product innovation.
Despite the approximately 20% stock pullback and Coty trading at about 6.5x FY2 EV/EBITDA versus its three-year average of 11x, TD Cowen remains cautious due to consumer beauty weakness and retailer destocking issues. InvestingPro analysis suggests the stock is currently undervalued, with 12+ additional exclusive insights available to subscribers, including detailed profitability metrics and growth forecasts in the comprehensive Pro Research Report.
The firm acknowledged Coty’s strengths, including its position as #3 in the approximately $50 billion prestige fragrance category and #1 in the roughly $7 billion mass fragrance market in developed markets, along with its commitment to deleveraging with first-half 2026 free cash flow guidance of over $350 million.
In other recent news, Coty Inc. reported mixed fourth-quarter results, with organic sales declining by 9%, aligning with expectations. The company’s adjusted earnings per share showed a loss of $0.05, impacted by lower-than-expected gross margins and higher SG&A expenses. Following these results, several financial firms have adjusted their outlook on Coty. Wells Fargo (NYSE:WFC) lowered its price target to $4.00, maintaining an Equal Weight rating due to valuation concerns. Goldman Sachs also reduced its price target to $4.50, citing mixed results while maintaining a Neutral rating. RBC Capital adjusted its price target to $10.00, noting underwhelming guidance for the first half of fiscal year 2026. BofA Securities decreased its price target to $3.50, highlighting weak fourth-quarter results and flat prestige revenues. Additionally, Jefferies downgraded Coty’s stock rating from Buy to Hold, reducing its price target to $4.00, amid concerns over the company’s decision to cut back on its mass cosmetics segment.
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