Coty stock price target lowered to $3.50 at BofA on weak results

Investing.com - BofA Securities has lowered its price target on Coty Inc . (NYSE:COTY) to $3.50 from $4.00 while maintaining an Underperform rating following weaker-than-expected fourth-quarter results. The stock, currently trading at $3.81, has declined over 30% year-to-date, reflecting significant market pressure.

The beauty company’s underperformance was primarily driven by declines in both the U.S. prestige and mass beauty markets, according to BofA. Coty’s prestige revenues remained flat on a like-for-like basis in fiscal 2025, despite the overall market growing 3%. Despite challenges, InvestingPro data shows the company maintains impressive gross profit margins of 65.23%.

BofA attributed the prestige segment’s underperformance to retailer destocking, tough comparisons against fiscal 2024’s strong innovation, and a more promotional environment, along with headwinds in prestige cosmetics.

In the mass beauty segment, the market grew 2% in fiscal 2025, but Coty’s sell-in and sell-out declined 5% due to channel shifts, lower media investment, and competitive dynamics.

The firm noted that Coty has built up U.S. inventory for prestige fragrances to mitigate tariffs, though some of the benefit is expected to be offset by a more promotional environment. The company’s overall revenue declined 1.68% in the last twelve months, reflecting these operational challenges.

In other recent news, Coty Inc. reported its fourth-quarter 2025 earnings, revealing a notable discrepancy between earnings per share (EPS) expectations and actual results. The company posted an EPS of -$0.05, significantly missing the anticipated $0.02, which constituted a negative surprise of 350%. However, Coty’s revenue for the quarter reached $1.25 billion, exceeding the forecasted $1.21 billion by 3.31%. This mixed financial performance has drawn investor attention, particularly due to the earnings miss. Additionally, Jefferies downgraded Coty from Buy to Hold, citing concerns over the company’s decision to reduce investment in its mass cosmetics segment. Jefferies also adjusted its price target for Coty to $4.00 from $6.00. This decision reflects the potential challenges Coty may face as it navigates changes in its cosmetics division. These developments highlight the current dynamics influencing Coty’s market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.