Did Coty’s (COTY) Business Restructuring and Consumer Beauty Review Just Shift Its Investment Narrative?

• Coty Inc. recently announced a comprehensive strategic restructuring, integrating its Prestige Beauty and Mass Fragrance businesses while initiating a review of its Consumer Beauty segment with options such as partnerships, divestitures, or spin-offs under consideration to strengthen the balance sheet.
• This reorganization involves significant leadership changes and positions Coty to leverage its scale and expertise across R&D, distribution, and marketing, with a focus on maximizing growth in the fragrance sector and evaluating the future of its mass cosmetics portfolio.
• We'll look at how Coty's refreshed focus on fragrance leadership and its Consumer Beauty review could influence its long-term investment narrative.

We've found 19 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Coty Investment Narrative Recap

Owning Coty stock means believing in the company’s ability to lead in fragrance and premiumization, capitalize on innovation, and efficiently navigate category reviews and integrations. The recent $900 million senior unsecured notes offering appears primarily focused on refinancing existing debt, without materially altering the near-term catalyst of inventory destocking or fully resolving Coty’s high leverage risk, which continues to weigh on flexibility and margin recovery.

Among recent updates, Coty’s comprehensive strategic restructuring, merging Prestige Beauty with Mass Fragrance and reviewing Consumer Beauty, stands out as most relevant. This move aims to better utilize scale in R&D and marketing across fragrance, a sector still seen as central to the company’s future growth drivers.

Yet, investors should keep in mind that, in contrast to operational improvements, high financial leverage remains a concern if…

Read the full narrative on Coty (it's free!)

Coty's narrative projects $6.1 billion revenue and $302.1 million earnings by 2028. This requires 1.3% yearly revenue growth and an earnings increase of $683.2 million from current earnings of -$381.1 million.

Uncover how Coty's forecasts yield a $5.04 fair value, a 20% upside to its current price.

Exploring Other Perspectives

Private investors in the Simply Wall St Community place Coty’s fair value across a wide US$3.69 to US$11.22 range, based on five distinct estimates. Against this backdrop, the challenge of managing high debt levels could have broader implications for Coty’s long-term performance, making it worthwhile to compare these differing opinions.

Explore 5 other fair value estimates on Coty - why the stock might be worth 12% less than the current price!

Build Your Own Coty Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Coty research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Coty research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Coty's overall financial health at a glance.

Curious About Other Options?

Don't miss your shot at the next 10-bagger. Our latest stock picks just dropped:

• Find companies with promising cash flow potential yet trading below their fair value.
• Trump has pledged to "unleash" American oil and gas and these 22 US stocks have developments that are poised to benefit.
• These 10 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com