Deutsche Bank: 4 Reasons Why Coty's Stock Is No Longer Attractive
Coty Inc (NYSE: COTY)’s in-line third-quarter results and “uninspiring” commentary prompted a sharp sell-off this week and reinforced one analyst's disengagement from the beauty product manufacturer's stock.
The Rating
Deutsche Bank analyst Faiza Alwy downgraded Coty from Buy to Hold and cut the price target from $21 to $13.
The Thesis
Four factors that previously justified Deutsche Bank's bullishness are no longer in play, Alwy said in a note:
The earlier thesis assumed a sales decline in the consumer beauty segment would stabilize through successful relaunches of CoverGirl, Clariol and other brands.
At the same time, ALMEA’s white space distribution opportunities and tailwinds in China were forecast to drive long-term organic growth.
Coty’s operating profit and bottom line were also modeled to rise on synergies from the purchase of Procter & Gamble Co (NYSE: PG)’s specialty beauty segment.
Accelerating free cash flow was seen to support acquisitions in high-growth categories.
Price Action
Coty shares were down 0.93 percent at $14.36 at the time of publication Friday afternoon.
Related Links:
Deutsche Bank Likes Estee Lauder After 'Exceptionally Strong' Quarter
Ulta's Valuation Pushes This Bull To The Sidelines
Latest Ratings for COTY
May 2018 | Deutsche Bank | Downgrades | Buy | Hold |
May 2018 | Berenberg | Upgrades | Sell | Hold |
Feb 2018 | JP Morgan | Maintains | Underweight | Underweight |
View More Analyst Ratings for COTY
View the Latest Analyst Ratings
See more from Benzinga
On This Day In Market History: Central European Banking Systems Begin To Collapse
Ford Still Committed To SUV, Truck Shift Even As Iran Relations Threaten Spike In Gas Costs
© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.