Wells Fargo analyst Christopher Carey has maintained their neutral stance on COTY stock, giving a Hold rating yesterday.
Geoff Meacham has given his Hold rating due to a combination of factors regarding Coty’s performance and outlook. The company’s second-quarter sales and EBITDA surpassed expectations, with earnings per share aligning closely with projections, while maintaining its full-year guidance. Despite these positive results, there is an anticipated normalization in beauty market growth for the second half of the year, which Coty is expected to navigate with some flexibility but also cautious optimism. The company’s like-for-like sales growth and margin expansions in its Prestige segment are notable, but these are tempered by modest growth expectations and the impact of foreign exchange and divestitures on reported sales.
The Hold rating also reflects Coty’s current strategic position and market dynamics. Although Coty’s Prestige segment in China showed significant growth, outperforming a declining market, and there was solid performance in travel retail and e-commerce sectors, the Consumer Beauty segment saw a decline due to elevated trade inventory. Additionally, while there have been improvements in supply chain service levels and moderated inflation, the company faces challenges such as increased excess and obsolescence charges that have impacted gross margins. Taken together, these factors suggest that while Coty is executing well in certain areas, there are enough uncertainties and headwinds to warrant a cautious stance, leading to the Hold recommendation.
Carey covers the Consumer Defensive sector, focusing on stocks such as Campbell Soup, Church & Dwight, and Clorox. According to TipRanks, Carey has an average return of 4.2% and a 52.14% success rate on recommended stocks.
In another report released yesterday, Barclays also maintained a Hold rating on the stock with a $13.00 price target.
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Coty (COTY) Company Description:
Coty, Inc. engages in the manufacture, market, sale, and distribution of branded beauty products. It operates through the following segments: Consumer Beauty, Luxury, and Professional Beauty. The Consumer Beauty segment offers color cosmetics, retail hair coloring and styling products, body care, and mass fragrances. The Luxury segment comprises of prestige fragrances, premium skincare, and premium cosmetics. The Professional Beauty segment consists hair and nail care products for salon professionals. The company was founded by Francois Coty in 1904 and is headquartered in New York, NY.
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