TD Cowen analyst Oliver Chen reiterated a Hold rating on Coty (COTY – Research Report) today and set a price target of $6.70.
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Oliver Chen has given his Hold rating due to a combination of factors impacting Coty’s performance. The company’s recent guidance for FY25 suggests ongoing challenges, particularly in the near term, as weaknesses in the Chinese market and inventory reductions by retailers may result in sales to vendors being lower than final sales to consumers. Although the beauty sector is expected to recover, several quarters of difficulties are anticipated, influenced by factors like de-stocking, reduced innovation levels, and shifting consumer behaviors.
Despite these challenges, Coty’s stock is considered to have a relatively de-risked valuation at its current price, which suggests limited downside risk. However, the stock is expected to remain stable without significant upward movement until FY26. While Coty’s fragrance segment continues to perform strongly, the company needs to further innovate its mass cosmetics offerings to achieve more consistent growth. The price target has been adjusted from $8.30 to $6.70, reflecting these revised expectations.
In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $7.00 price target.