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Research Alert: CFRA Maintains Hold Opinion On Shares Of Coty Inc.

05/10/2021 09:48

01:45 PM EDT, 05/10/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We lift our 12-month target to $10 from $6, calculated by applying a FY 22 (Jun.) EV/EBITDA multiple of 13x, which is below peers but slightly above COTY's five-year historical average. We lower our FY 21 EPS estimate to $0.03 from $0.08, but lift FY 22's to $0.24 from $0.21. COTY posts F3Q (Mar-Q) adj-EPS of $0.00 vs. ($0.14), a penny below consensus. Sales fell 3.3%, but the highlight was strong gross margins of 62.2% (+450 bps Y/Y and +350 bps Q/Q). COTY's F4Q guide was a bit soft, but we think there is some conservatism built in. COTY did not provide explicit FY 22 guidance but does expect both sales and profit growth. Although we're encouraged with the progress COTY has made on its transformation plan in a relatively short period of time, we keep a Hold as we believe the shares adequately reflect the risks/rewards. COTY still has a substantial amount of debt and lags some of its peers in terms of e-commerce strength and exposure to high-growth markets (e.g., Asia) and categories (e.g., skincare).