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On Thursday, DA Davidson reiterated a Buy rating on Coty Inc . (NYSE: NYSE:COTY) shares with a price target of $12.50. According to InvestingPro data, the stock is currently trading near its 52-week low of $6.59, significantly below its high of $13.30, suggesting potential upside opportunity. InvestingPro’s Fair Value analysis indicates the stock is currently undervalued. The firm highlighted Coty’s plans to sell its $1.1 billion stake in Wella by December 2025, noting that a lockup provision has recently expired, providing Coty with greater flexibility to find a buyer. According to the analyst, the sale of the Wella stake is not necessary for Coty to reach its net leverage goal of approximately 2 times by the December 2025 target date. The company’s strong revenue base of $6.15 billion in the last twelve months and impressive gross profit margin of 64.93% demonstrate its operational strength. As a result, the firm anticipates that the proceeds from the sale could be used for share repurchases.
Coty’s shares are currently trading at what DA Davidson considers an inexpensive valuation, at 6.4 times the firm’s estimated calendar year 2026 EBITDA. While the current P/E ratio stands at 38.04x, InvestingPro analysis reveals multiple additional valuation metrics and 10+ exclusive ProTips that could help investors make more informed decisions. The analyst believes that the company’s chief executive officer has a solid track record, which is not fully reflected in the stock’s price. DA Davidson’s analysis suggests that an incremental share repurchase of $1.1 billion could reduce the share count by 17% and potentially increase fiscal year 2026 earnings per share by $0.11, or 19%.
The firm added Coty to its STAMPEDE list, which stands for "Strategic Actions that Might Propel Equity Dramatic Upside." The inclusion is based on the potential for portfolio restructuring, one of the criteria for the list. With a beta of 1.89, investors should note the stock’s higher volatility compared to the market. For a comprehensive analysis of Coty’s potential, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which provides in-depth insights into the company’s financial health and growth prospects. The STAMPEDE list is DA Davidson’s compilation of stocks that they believe have significant upside potential due to strategic corporate actions.
Coty’s strategic decision to sell its Wella stake is seen as a positive move that could enhance shareholder value, especially if the company opts to repurchase shares with the proceeds. The sale and subsequent actions align with the company’s broader financial strategy and could contribute to a stronger financial position in the coming years.
In other recent news, Coty Inc. has been the focus of various financial institutions and their analyses. Goldman Sachs initiated coverage on Coty with a Neutral rating, citing a balanced risk/reward for the company’s stock due to factors such as strength in the prestige fragrance business and concerns in the Consumer Beauty division. Meanwhile, DA Davidson lowered Coty’s share target to $12.50 but maintained a Buy rating, following Coty’s first-quarter fiscal year 2025 earnings report which aligned with EBITDA expectations.
Barclays (LON:BARC) expressed concerns about Coty’s frequent strategy adjustments, leading to a downgrade of Coty’s stock rating from Equal Weight to Underweight. The firm also reduced its price target for Coty’s shares to $7.00. On another note, Coty’s shareholders approved executive pay and elected board members in a recent annual meeting, demonstrating their support for the company’s current direction.
In terms of financial performance, Coty reported mixed results for Q1, missing analyst estimates for earnings while slightly falling short on revenue expectations. The company also lowered its full-year earnings guidance. These recent developments highlight the ongoing challenges and opportunities that Coty faces in the beauty industry.
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