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Investing.com - Goldman Sachs lowered its price target on Coty Inc . (NYSE:COTY) to $4.50 from $6.00 while maintaining a Neutral rating following the company’s mixed fourth-quarter results. The stock, currently trading at $3.81, has declined over 22% in the past week alone, with InvestingPro data showing the shares are now trading near their 52-week low of $3.75.
The cosmetics company reported organic sales declined 9% in the quarter, relatively in line with expectations of -9.3%/-8.9%. Lower-than-expected gross margins and higher-than-expected SG&A expenses led to an adjusted earnings per share loss of $0.05, or $0.02 excluding the negative $0.07 impact from equity swap.
Coty management provided its fiscal year 2026 outlook, projecting worse-than-expected declines in the first half of the year, followed by an anticipated return to growth in the second half. The company cited trade inventory reduction, an elevated promotional environment, and tough comparisons as factors pressuring sales in the first half.
Goldman Sachs noted that Coty expects weaker topline performance along with greater tariff headwinds and restoration of variable compensation to pressure gross margins and drive adjusted EBITDA and adjusted EPS declines in the first half of fiscal 2026.
The investment bank lowered its fiscal 2026 and 2027 EPS estimates to reflect the cautious backdrop, citing limited visibility into end-market recovery and higher-than-expected declines in the first half of 2026 that suggest downside risks to growth trends for the year, especially if consumer demand remains subdued. According to InvestingPro analysis, the stock appears undervalued at current levels, with analysts maintaining a consensus target suggesting potential upside. Subscribers can access 12 additional ProTips and a comprehensive Pro Research Report for deeper insights into COTY’s valuation and prospects.
In other recent news, Coty Inc. reported its fourth-quarter 2025 earnings, which revealed a notable miss on earnings per share (EPS) expectations. The company posted an EPS of -$0.05, significantly below the anticipated $0.02, representing a negative surprise of 350%. However, Coty’s revenue reached $1.25 billion, exceeding the forecasted $1.21 billion by 3.31%. Analysts from RBC Capital maintained an Outperform rating on Coty but lowered their price target to $10, citing underwhelming guidance for the first half of fiscal year 2026. Meanwhile, BofA Securities reduced its price target to $3.50, maintaining an Underperform rating due to weaker-than-expected fourth-quarter results. Jefferies also downgraded Coty from Buy to Hold, setting a new price target of $4.00. The downgrade was attributed to Coty’s plan to reduce investment in its mass cosmetics segment, which Jefferies believes could exacerbate the division’s decline. These developments reflect ongoing challenges for Coty in both the prestige and mass beauty markets.
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