Stifel Affirms Coty (COTY) at 'Buy'; ghd Acquisition Shows Willingness to Perform Deals

October 17, 2016 2:27 PM EDT
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Price: $22.76 --0%

Rating Summary:
    4 Buy, 11 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 10 | Down: 14 | New: 22
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Stifel affirms its Buy rating and $32 price target on Coty Inc. (NYSE: COTY) after the company announced that it has reached a definitive agreement to acquire ghd from Lion Capital LLP for approximately £420 million (ca. $510 million) in cash.

The firm commented on Monday: Overall, we believe the acquisition is notable as it indicates Coty’s willingness to do more deals and also that the company remains committed to the professional hair care business acquired from Procter & Gamble. We believe Coty remains in the very early innings of a considerable opportunity to build a global beauty business, with improving results in the legacy business coupled with the acquisition of select P&G beauty brand providing increasing optionality. We continue with our Buy rating and $32 price target, 23x and 15x F2018E EPS and EBITDA, respectively, with the premium multiple justified by an anticipated gradual improvement in sales growth, ongoing productivity initiatives, and longer-term optionality to utilize strong cash flow to make meaningful acquisitions.

For an analyst ratings summary and ratings history on Coty Inc. click here. For more ratings news on Coty Inc. click here.

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