Coty Inc. (COTY) PT Lowered to $8 as JPMorgan Believes Guide Could Have Been Stronger

JPMorgan analyst Andrea Teixeira lowered the price target on Coty Inc. (NYSE: COTY) to $8.00 (from $10.00) after the company reported a quarter that was solid with a LFL sales beat (+19%), stronger-than-expected gross margin (64.6%), and a reiterated outlook, which has recently been rewarded in this sector.

The analyst reiterated a Neutral rating, stating "we think there was probably some disappointment that the stronger F3Q performance was not translating to a better FY22 outlook (now guiding to adj. EBITDA $900M vs. $900 “at a minimum” before), but there's still a lot of uncertainty and headwinds ahead. To name a few of these hurdles: China lockdowns, potential for deceleration in the fragrances category given the strong performance during the pandemic with recruitment of new consumer cohorts who may not repeat given inflationary pressures, Russia exit, incremental inflation, risk of price elasticity ahead, and COTY’s high Europe exposure. Also, the company is reinvesting upside to drive top-line momentum limiting the flow through."

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