DA Davidson maintains Coty stock buy rating, $12 target

On Thursday, DA Davidson reaffirmed its positive stance on Coty Inc . (NYSE: NYSE:COTY), maintaining a Buy rating and a price target of $12.00. Currently trading at $5.46, near its 52-week low and down over 50% from its high of $11.99, the stock has caught analysts’ attention. The firm’s analysts highlighted the performance of Coty’s brands in their updated prestige beauty social media survey, noting that half of Coty’s six brands either held their position or climbed in rank. Additionally, the same number of brands succeeded in retaining or growing their social media following. According to InvestingPro, the company maintains impressive gross profit margins of 65.4%.

The luxury skincare brand Orveda stood out with a significant leap, moving up four spots and witnessing a 46% increase in its follower count. Other notable brands, Gucci and philosophy, each saw a modest growth of 1% in their followers. These positive social media trends are part of the analysts’ rationale for the Buy rating.

Coty’s recent business developments also played a role in DA Davidson’s assessment. The company’s move to divest its minority stake in SKKN by Kim was mentioned, along with expectations for the sale of its Wella stake. Analysts predict that this latter transaction could fetch at least $1 billion in calendar year 2025.

The $12 price target set by DA Davidson is grounded on a multiple of 10 times the firm’s projected CY26E EBITDA for Coty, which stands at $1,249 million. This valuation reflects the analysts’ confidence in Coty’s future financial performance and the anticipated positive outcomes from the company’s strategic asset sales.

In other recent news, Coty Inc. has reported a 3.3% decline in second-quarter fiscal year 2025 sales, which was more than anticipated. The company faced challenges in various markets, including China and the U.S., and saw a decrease in like-for-like sales by 1%. Despite these challenges, Coty’s Prestige Fragrance segment showed high single-digit growth, and the company managed to exceed expectations in gross and operating margins. Additionally, Coty completed the sale of its minority interest in SKKN by Kim, with plans to focus on reducing debt and strengthening its financial position. Analysts at Canaccord Genuity have adjusted Coty’s price target to $8, while Raymond (NSE:RYMD) James set it at $9, both maintaining a Buy rating. Meanwhile, DA Davidson reaffirmed a Buy rating with a $12 price target, highlighting the company’s social media performance and future strategic moves. Jefferies also maintained a Buy rating with an $8 price target, noting Coty’s strategic divestiture moves. Furthermore, Moody’s upgraded Coty’s Corporate Family Rating to Ba1, acknowledging the company’s successful debt reduction and improved balance sheet.

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