JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
On Monday, Jefferies reaffirmed its Buy rating on Coty Inc . (NYSE: NYSE:COTY) shares with a steady price target of $8.00. The stock, currently trading at $5.53, has fallen significantly from its 52-week high of $11.99. According to InvestingPro analysis, Coty appears undervalued at current levels, with impressive gross profit margins of 65.4%. The endorsement follows Coty’s recent announcement on Friday regarding the sale of the Skkn beauty brand, owned by Kim Kardashian, to her own company, Skims. This strategic move had been anticipated by industry insiders ever since rumors of a potential Skims initial public offering began to circulate.
Coty has expressed intentions to focus on its partnership with Kylie Cosmetics, another celebrity-endorsed brand in its portfolio. Analysts at Jefferies perceive a sale of Kylie Cosmetics in the near term as an unlikely event. Instead, Coty is looking to allocate the proceeds from the Skkn brand divestiture towards reducing its debt. This financial maneuver is expected to be well-received by the market, as it indicates Coty’s commitment to improving its balance sheet.
The transaction aligns with Coty’s broader strategy to streamline its brand portfolio and strengthen its financial position. By divesting non-core assets, the company is able to concentrate on its most profitable ventures and enhance overall business performance.
The sale is also indicative of the evolving landscape within the beauty industry, where brand affiliations and celebrity endorsements play a significant role in shaping company strategies. Coty’s decision to maintain its relationship with Kylie Cosmetics suggests a focused approach to leveraging celebrity partnerships for growth.
Market observers will be watching closely to see how Coty’s strategic decisions, including this recent divestiture, will impact its financial health and market position in the competitive beauty industry. For deeper insights into Coty’s financial metrics and growth potential, InvestingPro subscribers can access comprehensive analysis and additional ProTips in the detailed Pro Research Report.
In other recent news, Coty Inc. reported its fiscal second-quarter results, revealing a 3% decline in revenue to $1.67 billion, missing analyst expectations of $1.73 billion. The company’s adjusted earnings per share stood at $0.11, falling short of the $0.21 consensus estimate. Despite these challenges, Coty’s Prestige Fragrance segment showed resilience with high single-digit growth, although overall performance was affected by weaker trends in China, Travel Retail Asia, and Australia. Moody’s Ratings upgraded Coty’s Corporate Family Rating to Ba1 from Ba2, acknowledging the company’s efforts in reducing financial leverage and maintaining robust liquidity.
Analyst firms have adjusted their outlooks following Coty’s earnings announcement. Canaccord Genuity reduced Coty’s price target to $8 while maintaining a Buy rating, citing challenges in the beauty market and a sales decline of 3.3%. Similarly, Raymond (NSE:RYMD) James cut the price target to $9, maintaining an Outperform rating, and DA Davidson adjusted its price target to $12, noting a decrease in organic sales. Coty has also revised its full-year fiscal 2025 outlook, anticipating a 1-2% decline in like-for-like sales, consistent with the second quarter’s performance.
Despite near-term volatility, Coty continues to focus on long-term profitability through operational improvements and cost reduction efforts. The company plans to increase investment in brand-demand building activities and is preparing for major product launches in fiscal year 2026. Coty’s management remains confident in its ability to accelerate sales growth and outperform the beauty industry in the coming years.
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