TD Cowen analyst Oliver Chen maintained a Hold rating on Coty today and set a price target of $4.00.
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Oliver Chen has given his Hold rating due to a combination of factors impacting Coty’s current and future performance. The company is undergoing structural changes aimed at enhancing accountability and visibility, particularly in English-speaking markets, which is seen as a positive step. However, the recent Kering and L’Oréal deal adds pressure on Coty to innovate and strengthen its proprietary capabilities to remain competitive and attractive as a licensee partner.
Despite Coty’s efforts in innovation and brand-building, the path to valuation improvement is dependent on financial deleverage and monetization events, alongside achieving positive revenue growth. The competitive landscape remains challenging, with strong players like L’Oréal and Estee Lauder, and the rise of smaller brands gaining market share. Although Coty’s sell-outs are currently outpacing market growth rates, the company faces the task of normalizing inventory and executing its fragrance strategy across a wide price range to drive future growth. The valuation appears inexpensive, but the company must continue to demonstrate sustainable innovation and growth to justify a more favorable rating.
In another report released on October 18, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $4.50 price target.