Coty (COTY): Evaluating Valuation After $900 Million Debt Refinancing and Recent Share Price Moves

Coty recently wrapped up a substantial $900 million private offering of 5.6% senior notes due 2031. The company is redirecting proceeds to refinance existing debt and cover related expenses. This move demonstrates Coty's focus on liability management and financial flexibility.

See our latest analysis for Coty.

Coty’s fresh approach to its capital structure seems to be resonating with investors, as shown by the 4.58% jump in the share price over the last day and a 3.58% rise in the past week. Even so, momentum has faded over the longer term, with a year-to-date share price return of -36.73% and a one-year total shareholder return of -43.64%. This combination highlights just how much recent events and shifting risk perceptions are in play for the stock right now.

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With Coty’s valuation still sitting at a notable discount to analyst price targets, and its stock down sharply over the past year, the big question now is whether this creates a compelling buying opportunity or if the market has already priced in expectations for future growth.

Most Popular Narrative: 14% Undervalued

The narrative’s fair value estimate for Coty is $5.04, compared to a last close price of $4.34. This suggests room for the shares to potentially catch up, provided Coty can deliver on its future growth plans and revive sentiment.

Innovation-led launches, including blockbusters such as HUGO BOSS Bottled Beyond, additional high-profile fragrance releases, and an aggressive expansion into the rapidly growing body/ perfume mist category, are set to benefit from the surging demand for prestige scenting products across diverse demographics. These factors are expected to support revenue gains and sustain high profitability.

Read the complete narrative.

What’s at the heart of this estimate? One central driver is the mix of margin expansion and top-line growth expected to fuel a sharp earnings turnaround within just a few years. How aggressive are these underlying growth targets? Discover the strategic moves and bold assumptions that shape Coty’s next chapter.

Result: Fair Value of $5.04 (UNDERVALUED)

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

However, persistent inventory destocking and heavy competition could weigh on Coty’s revenue growth. These factors may challenge the upbeat forecast if such headwinds persist.

Find out about the key risks to this Coty narrative.

Build Your Own Coty Narrative

If you see things differently or want to dig into the details on your own, it’s quick and easy to build your personal Coty narrative in just minutes. So why not 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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