Coty (COTY) Stock Forecast & Price Target

Coty has demonstrated significant improvements in its fundamentals since 2020, which support a higher valuation despite any near-term market dynamics. The company's management expects both the mass and prestige beauty segments to achieve gradual growth throughout the year, driven by major product launches and expansion into new channels and regions. Additionally, US prestige fragrance sell-out growth has outpaced market growth, with reported increases of over double digits, indicating robust demand in a key segment of Coty's business.

Coty's FY'26 LFL sales growth forecast has been revised downward to -1.9%, demonstrating a significant decline from previous expectations, accompanied by an adjusted EBITDA estimate of $1 billion, falling short of earlier projections. The company's gross margins experienced a noticeable decline of 195 basis points to 62.3%, attributed to weaker than anticipated sales performance, particularly in the consumer beauty segment, where LFL sales plummeted by 12%. Further compounding the negative outlook, management indicated that 4Q LFL sales worsened to a decline of -9% year-over-year, highlighting ongoing challenges in the mass color cosmetics category.