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Deutsche Bank: 4 Reasons Why Coty's Stock Is No Longer Attractive

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Deutsche Bank: 4 Reasons Why Coty's Stock Is No Longer Attractive
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Coty Inc (NYSE: COTY)’s in-line third-quarter results and “uninspiring” commentary prompted a sharp sell-off this week and reinforced one analyst's disengagement from the beauty product manufacturer's stock

The Rating

Deutsche Bank analyst Faiza Alwy downgraded Coty from Buy to Hold and cut the price target from $21 to $13.

The Thesis

Four factors that previously justified Deutsche Bank's bullishness are no longer in play, Alwy said in a note: 

  • The earlier thesis assumed a sales decline in the consumer beauty segment would stabilize through successful relaunches of CoverGirl, Clariol and other brands.
  • At the same time, ALMEA’s white space distribution opportunities and tailwinds in China were forecast to drive long-term organic growth.
  • Coty’s operating profit and bottom line were also modeled to rise on synergies from the purchase of Procter & Gamble Co (NYSE: PG)’s specialty beauty segment.
  • Accelerating free cash flow was seen to support acquisitions in high-growth categories.

Price Action

Coty shares were down 0.93 percent at $14.36 at the time of publication Friday afternoon. 

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Latest Ratings for COTY

DateFirmActionFromTo
Aug 2018Morgan StanleyUpgradesEqual-WeightOverweight
Aug 2018CitigroupMaintainsBuyBuy
Aug 2018Wells FargoMaintainsMarket PerformMarket Perform

View More Analyst Ratings for COTY
View the Latest Analyst Ratings

Posted-In: Clairol Covergirl Deutsche Bank Faiza AlwyAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

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