Coty Delivers Mixed Q4 Results; Shares Pop 15%

Multinational beauty company Coty (COTY) delivered mixed fourth-quarter and full-year results for the fiscal year ended June 30, 2021. While the company posted robust revenue growth, earnings results fell short of Wall Street expectations. COTY shares jumped 14.7% to close at $9.44 on August 26.

Fiscal fourth-quarter revenue increased 89.6% year-over-year to $1.06 billion, surpassing consensus estimates of $1.01 billion. Fiscal 2021 revenue landed at $4.63 billion, above the high-end of the $4.5 billion to $4.6 billion guidance range.

Furthermore, adjusted net loss in Q4 narrowed to $67.2 million compared to an adjusted net loss of $353.7 million in the same quarter last year. The company delivered an adjusted EPS loss of $0.09 per share, worse than analysts’ estimated loss of $0.06.

For the full year, Coty posted adjusted earnings of $0.01 per share, an improvement from the loss of $0.48 per share delivered in FY 2020.

According to Coty CEO Sue Y. Nabi, the fourth quarter marked the end of a transformational year. Focus now shifts to positioning Coty as a global beauty powerhouse in its prestige cosmetics and skincare portfolio. (See Coty stock charts on TipRanks)

“We intend to capitalize on this momentum in FY22, significantly expanding both our distribution and assortment,” Nabi stated.

In the first quarter of Fiscal 2022, Coty is already experiencing strong momentum in the fragrance market in the U.S. and China. Recovery in emerging markets and broader color cosmetics is also gathering steam. Consequently, the company is projecting sales growth in the high teens.

Recently, RBC Capital analyst Nik Modi reiterated a Buy rating on the stock with a $12 price target, implying 27.12% upside potential to current levels.

“After a volatile few years integrating the P&G acquisition, significant COVID disruptions, and divesting the Wella business, we expect Coty’s topline to be stagnant in the near term while the company focuses on simplification/uncovering efficiencies, ultimately driving margin expansion,” Modi stated.

Consensus among analysts is a Strong Buy based on 3 Buys and 1 Hold. The average Coty price target of $13 implies 37.71% upside potential to current levels.

Additionally, COTY scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.