Coty’s Market Challenges and Opportunities: A Hold Rating Amidst Near-Term Pressures and Strategic Uncertainties

Oliver Chen, an analyst from TD Cowen, maintained the Hold rating on Coty (COTY – Research Report). The associated price target was lowered to $5.00.

Oliver Chen’s rating is based on several factors that influence Coty’s current market position. The stock is experiencing softness due to ongoing near-term pressures, although its valuation remains relatively low at approximately 7 times the FY2 EV/EBITDA. Chen anticipates that these headwinds will persist until the latter half of 2026 when comparisons become more favorable, but he remains optimistic about potential sales improvements driven by innovation.
Chen acknowledges that management is making efforts to rejuvenate the Consumer Beauty segment, which constitutes a significant portion of sales. However, challenges such as intense competition and changing retail trends pose obstacles. Additionally, while the mass fragrance business shows potential for growth, questions remain about the sustainability of prestige fragrances. Investors are also concerned about leverage and the potential sale of Wella, as well as the possibility of separating Coty’s Consumer Beauty and Prestige divisions to unlock value. These factors collectively contribute to the Hold rating.

Chen covers the Consumer Cyclical sector, focusing on stocks such as Ermenegildo Zegna, Kohl’s, and Costco. According to TipRanks, Chen has an average return of 4.7% and a 50.79% success rate on recommended stocks.

In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $5.00 price target.