Coty’s Strategic Split: Balancing Potential Value Unlock with Market Challenges

Susan Anderson, an analyst from Canaccord Genuity, maintained the Hold rating on Coty (COTY – Research Report). The associated price target remains the same with $5.00.

Susan Anderson’s rating is based on a combination of factors surrounding Coty’s current market situation and potential strategic moves. Coty is reportedly considering a split of its business into prestige and consumer segments, which could unlock significant shareholder value. However, the success of this strategy is contingent upon finding a buyer for the mass beauty segment and addressing uncertainties such as the status of the Gucci license and existing debt obligations.
Despite the potential for a valuation increase, Coty is currently facing challenges with declining sales and a stock price that has dropped significantly over the past year. The company’s ability to meet its deleveraging goals by 2025 is also uncertain, particularly if they cannot sell their remaining stake in Wella. These uncertainties and challenges contribute to the Hold rating, as the potential for upside is balanced by the risks involved.

In another report released on June 13, TD Cowen also maintained a Hold rating on the stock with a $5.00 price target.