Coty (COTY): Evaluating Its Valuation After Surprise Loss, Weak Guidance, and Strategic Fragrance Pivot

If you’re scrolling through your watchlist wondering what just happened with Coty (COTY), you’re not alone. The company’s shares just plummeted after management announced a surprise quarterly loss along with weaker guidance, citing slumping revenue in key segments and ongoing headwinds. Tariffs, softer demand in mass beauty, and retailers pulling back on orders all appeared in the company’s latest update, putting a spotlight on shifting industry pressures and Coty’s strategic pivot toward its fragrance business to navigate the turbulence. This sharp move comes at the end of a year in which Coty’s stock has faced significant pressure. Shares are down almost 59% over the past twelve months, with momentum fading throughout much of the year. The recent disappointment on both the revenue and profit fronts triggered a nearly 20% drop in a single day and adds to persistent underperformance since January. The company has shifted investments and raised prices for premium lines in response, but increases in sales and profit have not yet followed. After this selloff and another round of cautious guidance, investors are left asking whether Coty’s current price already reflects all the near-term challenges. Some may also question if this turbulence could set up a potential opportunity if growth returns later in the year.

Most Popular Narrative: 20.8% Undervalued

According to community narrative, Coty is considered to be significantly undervalued in light of its long-term restructuring and future earnings growth potential.

Coty plans to improve its Prestige division’s baseline to make way for new innovations in fiscal 2026. The company aims to stimulate demand and drive future growth, which may have a positive impact on future revenue. Coty is also reallocating efforts and resources to focus on its highly profitable mass fragrance category. This category offers stronger growth prospects and higher gross margins compared to color cosmetics. As a result, this shift is expected to boost net margins.

Curious about what is fueling this bullish outlook? The narrative is built on bold changes and ambitious financial targets that are a departure from Coty’s past. What are the pivotal growth levers and profitability moves that analysts see taking shape? If you want to uncover the key quantitative forecasts and strategic bets that may lie beneath the surface, you will not want to miss what drives this 20% discount to fair value.

Result: Fair Value of $4.96 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing weakness in Asia and stiff competition from emerging beauty brands could quickly challenge Coty’s expected turnaround.

Find out about the key risks to this Coty narrative.

Another View: A Second Look at Value

While the first assessment leans on fair value calculations and analyst targets, the SWS DCF model also points to Coty being deeply undervalued based on its future cash flows. Will reality catch up, or does the market know something the models miss?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Coty for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Coty Narrative

If you see things differently or want a fresh angle, you can dive into the data yourself and build your own Coty story in just a few minutes, then do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Coty.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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