On Wednesday, Jefferies maintained its Buy rating on shares of Coty Inc . (NYSE: NYSE:COTY) but reduced the price target from $12.00 to $11.00. The adjustment followed a sell-side meeting with Coty's CEO and CFO in New York City where several key topics were discussed.
The conversation with Coty's leadership centered on a range of strategic issues affecting the company's performance. The topics included revised topline guidance that was lower than previous estimates, the positioning of inventory in the mass market retail channel, and the execution of cost reduction strategies.
Additionally, the executives at Coty highlighted their focus on innovation and the introduction of new products. They also outlined the future direction for the company's fragrance category, which is a significant segment of their business.
Despite the more conservative short-term outlook, Jefferies expressed continued confidence in Coty's long-term business opportunities. The firm's analyst cited the discussions from the meeting as a basis for the sustained Buy rating but acknowledged the need for a more cautious near-term perspective.
The new price target of $11.00 reflects a modest decrease from the previous target but indicates that Jefferies still sees potential for Coty's stock value to grow. The firm's stance suggests that, while immediate challenges are recognized, Coty's strategic initiatives could drive positive outcomes in the future.
In other recent news, Coty Inc. reported a like-for-like sales growth of 4-5% for the first quarter of fiscal year 2025, falling short of the projected 6%. The company's EBITDA for the same period is expected to remain flat or slightly lower year-over-year. Despite these figures, Coty maintains its full-year adjusted EBITDA growth projections at 9%-11%.
Deutsche Bank, DA Davidson, Stifel, and JPMorgan have responded by reducing their price targets for Coty, while maintaining various ratings. RBC Capital, Canaccord Genuity, and Jefferies have maintained their positive outlooks.
Coty has also announced the formation of its first Scientific Advisory Board to guide skincare research and development. These are some of the recent developments investors should be aware of.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Coty Inc.'s financial position and market performance. The company's market capitalization stands at $7.09 billion, with a P/E ratio of 93.97, indicating a high valuation relative to earnings. This aligns with the InvestingPro Tip that Coty is "trading at a high earnings multiple."
Despite the challenges noted in the Jefferies report, Coty has shown some positive financial indicators. The company's revenue for the last twelve months reached $6.118 billion, with a notable revenue growth of 10.15% over the same period. Additionally, Coty boasts an impressive gross profit margin of 64.39%, which supports the InvestingPro Tip highlighting "impressive gross profit margins."
However, investors should be aware that Coty's stock has faced recent headwinds. The InvestingPro data shows a 19.25% price decline over the past three months, corroborating the tip that the "stock price has fallen significantly over the last three months." This recent performance may be influencing analyst perspectives, including Jefferies' decision to lower the price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Coty, providing a deeper understanding of the company's financial health and market position.
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