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On Thursday, DA Davidson reaffirmed its positive stance on Coty Inc . (NYSE:COTY), maintaining a Buy rating and a price target of $12.00. According to InvestingPro data, the stock currently trades at $5.46, significantly below its 52-week high of $11.99, suggesting potential upside based on the company’s Fair Value assessment. The endorsement follows a recent prestige beauty social media survey which showed notable performance for three of Coty’s six brands. In the survey, these brands either held their ground or improved in ranking, while four brands succeeded in maintaining or growing their social media follower base. This social media success complements Coty’s impressive gross profit margin of 65.4%, as revealed by InvestingPro analysis.
Coty’s luxury skincare brand Orveda experienced significant momentum, climbing four ranks and witnessing a 46% increase in followers. Additionally, both Gucci and Philosophy reported a growth of 1% in their follower counts. This social media traction suggests a strengthening brand presence for Coty in the competitive beauty market.
The company has also been active on the business front. Coty recently completed the sale of its minority interest in SKKN by Kim. Looking ahead, DA Davidson anticipates the potential sale of Coty’s stake in Wella, which is expected to fetch at least $1 billion in the calendar year 2025.
The Buy rating and price target set by DA Davidson are predicated on a valuation of 10 times the estimated EBITDA for the calendar year 2026, which is projected to be $1,249 million. This valuation reflects confidence in Coty’s future financial performance and strategic business moves. InvestingPro analysis reveals 12+ additional investment insights and a comprehensive Pro Research Report, providing deeper understanding of Coty’s valuation metrics and growth potential.
Coty Inc. is a global beauty company that owns an impressive portfolio of renowned beauty brands. The company’s strategic decisions and performance in social media engagement are critical factors that analysts at DA Davidson considered while reiterating their investment stance.
In other recent news, Coty Inc. announced its second-quarter fiscal year 2025 results, revealing a 3.3% decline in sales, which was more than expected. Analysts from Canaccord Genuity and Raymond (NSE:RYMD) James responded by lowering their price targets for Coty to $8 and $9, respectively, while maintaining Buy and Outperform ratings. Coty’s prestige fragrance segment showed growth, but overall performance was impacted by challenges in China, Asia travel retail, and the U.S. consumer beauty market. Moody’s upgraded Coty’s ratings due to reduced financial leverage, highlighting the company’s efforts in debt repayment and balance sheet strengthening. The agency expects Coty’s debt-to-EBITDA leverage to improve to a low 3x range by December 2025. DA Davidson also adjusted its price target for Coty to $12, following the company’s report of an EBITDA that exceeded expectations despite an organic sales decline. Coty plans to use proceeds from asset sales, including its stake in Wella, to further reduce debt. Jefferies reiterated a Buy rating with an $8 price target, noting Coty’s strategic decision to sell the Skkn beauty brand to focus on partnerships like Kylie Cosmetics.
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