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On Thursday, Deutsche Bank (ETR:DBKGn) issued a new rating for Coty Inc . (NYSE:COTY), downgrading the company’s stock from Buy to Hold and adjusting the price target from $8.00 to $6.00. The decision came after Coty’s financial results for the third fiscal quarter of 2025 were released. The stock, currently trading at $4.57, has fallen 58% over the past year, according to InvestingPro data, which indicates the company is currently trading below its Fair Value. Deutsche Bank analyst Steve Powers noted that despite Coty’s focus on appropriate initiatives in a challenging operating environment, the downgrade reflects the company’s recent underperformance and a valuation that appears depressed.
Powers highlighted several factors influencing the downgrade, including slower growth trends in the beauty category, especially in the U.S. market, and new challenges arising from tariffs. Despite maintaining impressive gross profit margins of 65.4%, there are ongoing concerns about the company’s ability to effectively execute its growth strategies and turnaround plans. InvestingPro analysis reveals 12 additional key insights about Coty’s financial health and market position.
The analyst pointed out that potential improvements in macroeconomic conditions, such as increased category demand or the resolution of tariff uncertainties, could benefit Coty. Moreover, the possibility of Coty monetizing its stake in Wella, which is theoretically valued at around $1 billion, could also prove advantageous for the company. However, Powers emphasized that such catalysts are not entirely within Coty’s control.
The report also mentioned Coty’s upcoming financial obligations, with approximately $1.1 billion in debt maturities due in the calendar year 2026. The company’s current ratio of 0.71 indicates short-term obligations exceed liquid assets, while total debt stands at $3.66 billion. Given these upcoming maturities and the lowered forecasts, Deutsche Bank’s revised price target now sits at $6. The analyst concluded by cautioning investors about the potential for increased volatility in Coty’s stock in the near future. For a comprehensive analysis of Coty’s financial health and detailed valuation metrics, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, Coty Inc. reported its fiscal third-quarter 2025 earnings, which fell short of analyst expectations. The company posted earnings per share of $0.01, missing the forecasted $0.06, and reported revenue of $1.3 billion, slightly below the anticipated $1.31 billion. Canaccord Genuity analysts responded to these results by downgrading Coty’s stock from a "Buy" to a "Hold" rating, reducing the price target from $8.00 to $5.00. The downgrade reflects concerns over declining trends, particularly in Coty’s prestige segment, and uncertainties surrounding the sale of the Wella portfolio, which was expected to aid in debt reduction.
Despite these challenges, Coty is planning new product launches in its Prestige Fragrance segment and is targeting EBITDA margin expansion. The company is also implementing a €370 million cost-saving program to improve operational efficiency. Analysts noted that Coty’s path to reducing its leverage ratio below 2.5 times by the end of fiscal year 2025 now appears more challenging. Additionally, Coty is facing difficulties in the competitive beauty market, with global consumer uncertainty affecting demand.
Coty’s leadership has emphasized the company’s strategic focus on leveraging its market position, particularly in the mass fragrance category, where it holds a leading position. The company is also taking steps to address supply chain disruptions and market saturation, which are among the risks it currently faces. Looking ahead, Coty expects gradual improvement in fiscal 2026, driven by pricing strategies and new product introductions.
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