The Bull Case For Coty (COTY) Could Change Following Securities Law Probe on Operational Weaknesses

• In September 2025, Bleichmar Fonti & Auld LLP announced an investigation into Coty Inc. for potential federal securities law violations after Coty reported disappointing financial results tied to U.S. operational challenges and increased retailer inventory.
• This raised concerns among investors about Coty’s business practices and the impact of operational weaknesses on its longer-term outlook.
• We'll explore how the law firm's investigation and recent financial pressures could impact Coty's investment outlook and risk profile.

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Coty Investment Narrative Recap

Owning shares in Coty often comes down to believing in a recovery of core U.S. operations, normalization of retailer inventories, and renewed momentum from new product launches. The law firm investigation following recent disappointing results puts a spotlight on the company's operational execution, a key short-term catalyst for stabilization, while also amplifying the risk that inventory challenges could linger and further impact revenues in fiscal 2026. If the situation escalates, delays in inventory normalization and top-line growth may remain the biggest concern for shareholders.

Among recent announcements, Coty's August 2025 quarterly results stand out: the company reported further sales declines and extended its cautious outlook, expecting negative net revenues for the first half of fiscal 2026 but banking on a turnaround as new launches gain traction in the second half. This guidance is particularly relevant in light of the class action investigation, since near-term financial performance and U.S. operational pressures are central to both the legal inquiry and the company's path to recovery.

Yet behind the headline risk, investors should also be aware of the persistent volatility tied to...

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 a $683.2 million earnings increase from -$381.1 million.

Uncover how Coty's forecasts yield a $5.04 fair value, a 26% upside to its current price.

Exploring Other Perspectives

Five retail investors in the Simply Wall St Community assigned Coty a fair value ranging from US$3.69 to US$10.50 per share. While the company is counting on ending retailer destocking to spark a rebound, the diversity of community estimates shows just how varied expectations for its turnaround prospects can be.

Explore 5 other fair value estimates on Coty - why the stock might be worth over 2x more 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.

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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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