Coty Pops 8% on Q2 Earnings Beat, Raises EPS Guidance

Shares of Coty, Inc. (COTY) gained 8% after the company reported better-than-expected earnings for the fiscal second quarter ended January 31. It engages in the manufacture, market, sale, and distribution of branded beauty products. 

Adjusted earnings stood at $0.17 per share, beating the Street’s estimate of $0.11 per share. Also, it increased 30.8% from the last year’s quarter. Net revenues increased 12% year-over-year to $1.58 billion but came below the analysts’ expectations of $1.61 billion.

Driven by continued strength in the U.S., China, the EMEA region and Travel Retail, the Prestige segment’s net revenues grew 12% year-over-year to $1.01 billion. Net revenues generated by the Consumer Beauty segment rose 12% to $570.2 million during the quarter.

The CEO of Coty, Sue Y. Nabi, said, “The strong business trajectory of the first half of the year and continuing through January gives us confidence in our outlook for the second half of FY22.”

Outlook

Coty expects sales growth to be at the upper end of its guidance range of low-to-mid teens percentage on account of strong sales and sell-out momentum in the first half of Fiscal Year 2022.

Further, the company anticipates adjusted EBITDA of at least $900 million. Coty has raised its adjusted EPS guidance to $0.22-0.26 for Fiscal Year 2022, up from its previously guided range of $0.20-0.24.

Wall Street’s Take

Following the release of results, Jefferies analyst Stephanie Wissink maintained a Buy rating on the stock with a price target of $15 (61.8% upside potential from current levels).

Overall, the stock has a Moderate Buy consensus rating based on 6 Buys and 3 Holds. The average Coty price target of $13.50 implies 45.6% upside potential. Shares have gained 36.1% over the past year.

Positive Sentiment

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Coty, as 3.8% of investors increased their exposure to COTY stock over the past 30 days.

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