Coty (COTY) Stock Forecast & Price Target

Coty has demonstrated significant fundamental improvements since 2020, justifying a higher valuation amid current market conditions. The company's management anticipates gradual growth in both its mass and prestige segments, supported by several major product launches and an expansion into new markets and channels. Notably, US prestige fragrance sales growth has outpaced market growth, increasing at a rate 1.5 times the overall market, which underscores the strength of Coty's portfolio in the premium beauty segment.

Coty's financial outlook is negatively impacted by a revision of its FY'26 sales growth forecast to a decline of -1.9%, alongside adjusted EBITDA expectations reduced to $1 billion and EPS estimates lowered to $0.47, reflective of softer guidance. The company experienced significant headwinds in its consumer beauty segment, with like-for-like (LFL) sales down -12%, particularly in the mass color cosmetics category, which has faced ongoing challenges and resulted in underperformance relative to the overall category. Additionally, gross margins have declined by 195 basis points to 62.3%, indicating further financial strain amid weakening sales trends, with a notable drop in LFL sales worsening from -3% in the third quarter to -9% year-over-year in the fourth quarter.