Coty impresses analysts with skin care strategy

Sep. 22, 2022 6:54 AM ETCoty Inc. (COTY)By: Clark Schultz, SA News Editor

Just a drop

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Coty (NYSE:COTY) is being viewed favorable on Wall Street after holding a skin care strategy investor event where the company discussed key building blocks behind its strategy to accelerate growth and exposure to skin care.

The company outlined its goal to double the skincare business to $500M to $600M in revenue by FY25 and $600M to $700M in sales by FY26.

Bank of America analyst Anna Lizil noted that Coty expects to achieve that target primarily through growth of the Prestige business, which is expected to grow at a high-single digits rate.

"We view the strategy as a meaningful, though achievable, catalyst, pragmatically funded in part by $160mil and $75mil of productivity savings to be generated over FY23 and F24, respectively," she noted.

Deutsche Bank analyst Steve Powers observed that Coty's (COTY) better year-to-date performance was attributed to stronger growth across both Prestige and Consumer Beauty, as well as across Europe, the Americas, and Global Travel Retail.

"We see this as a positive step forward towards the achievability of full-year guidance that was reiterated—i.e., +6%-8% LFL sales growth (again, excluding impacts from the Russia exit), adjusted EBITDA of $955-$965 million, adjusted EPS of $0.32-$0.33, and leverage towards 4x exiting CY22."

Both Bank of America and Deutsche Bank reiterated Buy ratings on Coty (COTY).

Read more about Coty's guidance update.

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