Coty (COTY) Stock Forecast & Price Target

Coty has demonstrated significant improvement in its fundamentals since 2020, positioning itself for a higher valuation despite ongoing near-term challenges. The company's management anticipates gradual enhancement in both its mass and prestige segments, driven by major product launches and expansion into new channels and geographies. Additionally, recent performance in the U.S. market indicates robust growth, with prestige fragrance sell-out rates expanding at a rate 1.5 times that of overall market growth.

Coty's financial outlook has deteriorated significantly, reflected in a lowered FY’26 like-for-like (LFL) sales growth forecast to -1.9%, along with adjustments to adjusted EBITDA and EPS estimates, which now stand at $1 billion and $0.47, respectively. The company's gross margins experienced a decline of 195 basis points to 62.3%, exacerbated by a sharper decline in LFL sales, which worsened to -9% year-over-year in the fourth quarter after previously showing a -3% drop in the third quarter. Additionally, the Consumer Beauty segment is facing persistent challenges, particularly in the mass color cosmetics category, with LFL sales down 12%, indicating ongoing underperformance relative to the wider market.