Coty Has Seen Growth Across Categories And Price Tiers, Says Analyst - Coty (NYSE:COTY)

Raymond James analyst Olivia Tong reiterated an Outperform rating on the shares of Coty Inc COTY with a price target of $13.
Ahead of its presentation at a competitor conference, COTY issued a press release raising its F3Q LFL sales growth forecast.
COTY narrowed its FY23 LFL sales growth forecast to the upper end of its +6-8% outlook range while leaving its FY23 forecasts for margins and EPS unchanged as it plans to continue heavier support into skincare and recent launches, noted the analyst.
Last month, COTY had already said that momentum post-holiday had continued, and that F3Q was tracking ahead of the 7% LFL sales growth clip in F2Q.
The company attributed the progress to improving service levels, which has been a challenge, particularly in Prestige Fragrances.
The analyst raised the F3Q sales forecast by 3pts to +10% y/y on an LFL basis, which results in 8% growth when including the exit of Russia and 5% on a reported basis.
For FY23, the analyst maintained sales growth forecast for +8% LFL, +6%, including the Russia exit, and +1% reported.
COTY of today is significantly better positioned than in the past, with more broad-based growth across categories and price tiers, and productivity improvements, said the analyst.
The company is still navigating its fair share of headwinds, including softer sentiment and heightened geopolitical risks, particularly in Europe, where it generates nearly 50% of its sales. The analyst noted FCF generation has improved, fragrance continues to be in demand, and there is a meaningful pipeline of innovation in skincare to drive COTY’s steep catchup in skincare.
Price Action: COTY shares are trading higher by 2.27% at $11.03 on the last check Thursday.
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