1. Coty Inc. (NYSE:COTY)
Average Price Target Upside as of August 5: 79.93%
Number of Hedge Fund Holders: 22
Coty Inc. (NYSE:COTY), a subsidiary of JAB Beauty B.V., is a well-established international beauty corporation that is engaged in manufacturing, marketing, distributing, and selling a diverse range of products, including fragrances, color cosmetics, and skincare. Organized into Prestige and Consumer Beauty segments, the company has a global clientele and offers both luxury and mass-market items across over 130 countries and territories.
The company has a portfolio that includes 50 iconic brands in the cosmetics, skincare, and fragrance categories. The company has many luxury brands in its portfolio, including Calvin Klein Fragrances, Marc Jacobs Fragrances, Kylie Cosmetics, Lancaster, and more
Among 20 analysts that have covered Coty (NYSE:COTY), it has a consensus rating of Moderate Buy. The average price target of $13.00 implies an upside of 79.93%, as of August 5. It is the first stock on our list of top luxury stocks according to analysts.
On June 11, Piper Sandler lowered the price target on the stock to $13 from $15 and kept an Overweight rating. According to the firm, during the second quarter, the primary emphasis in the beauty and wellness sector was on consumer spending habits and the necessity for promotional efforts.
Coty (NYSE:COTY) is actively expanding its Prestige Beauty division to capitalize on the growing prestige beauty market, driving overall company growth. According to the research firm Circana, the dollar sales in the US prestige beauty industry grew by 14% year over year in 2023, reaching a total of $31.7 billion.
As of the FQ3 of 2024, Coty’s (NYSE:COTY) Prestige business (based on high-end premium products) accounted for 63% of the total sales and reported net revenues of $867.2 million, a rise of 8% on a reported basis and a robust 13% on a like-for-like basis during Q3. It highlights the company’s sustained performance in the high-end beauty market.
Geographically, Coty’s (NYSE:COTY) Prestige business saw significant expansion across all regions, with notable outperformance in Asia-Pacific, Europe, the Middle East, Africa, and the Travel Retail channel. This success is evidence of the effectiveness of the company’s localization and market penetration strategies.
Driving the double-digit growth in e-commerce within the Prestige segment were new product launches like Cosmic Kylie Jenner and Marc Jacobs Daisy Wild. These launches, combined with social media campaigns and collaborations with e-retail partners, not only boosted online sales but also, improved brand visibility and consumer engagement in digital channels.
At a stake value of $116.903 million, 22 hedge funds held positions in Coty (NYSE:COTY) in the first quarter. As of Q1, Sea Cliff Partners is the biggest shareholder in the company and has a position worth $29.1 million.
ClearBridge Mid Cap Strategy stated the following regarding Coty Inc. (NYSE:COTY) in its fourth quarter 2023 investor letter:
“Our holdings in the consumer staples sector also helped drive performance. Restaurant foodstuff distributor Performance Food Group continues to benefit from greater consumer spending on dining. Likewise, Coty Inc. (NYSE:COTY), the global beauty company comprised of a market-leading prestige fragrance business and mass cosmetic business, reported strong quarterly earnings with outperformance across all geographic regions and operating segments. With the continued strength of the prestige fragrance market globally, we believe the company’s fundamentals have improved much more than the stock’s valuation.”
While we acknowledge the potential of Coty Inc. (NYSE:COTY) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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