COTY Stock Price Increases 17.92%: Why It Happened

By Amit Chowdhry ● Nov 20, 2020
  • The stock price of Coty Inc (NYSE: COTY) increased from $5.30 to $6.25 (+17.92%) on Thursday, November 19. This is why it happened.

The stock price of multinational beauty company Coty Inc (NYSE: COTY) increased from $5.30 to $6.25 (+17.92%) on Thursday, November 19. One of the biggest triggers for Coty on Thursday was a research report issued by Citigroup.

Citigroup analyst Wendy Nicholson had upgraded shares of Coty from Neutral to Buy. And Nicholson more than doubled the brokerage’s price target of Coty from $4.50 to $10.

Nicholson cited Coty’s accelerating growth, margin improvements, and deleveraging of its balance sheet. Coty is also set to complete a deal by the end of the month where it is selling its salon business Wella to KKR for $2.5 billion. This deal will help the company pay down debt and focus on its cosmetics businesses like the recent acquisition of a majority stake in Kylie Cosmetics and the 20% ownership interest in the beauty business launched by Kim Kardashian.

Morningstar analyst Rebecca Scheuneman also offered positive insights about Coty. 

“We increase our fair value estimate for no-moat Coty, which had been under review, to $5.50 from $4.54,” wrote Scheuneman in a report via TheStreet. “In its September-ending first-quarter fiscal 2021, Coty exhibited sales recovery from the pandemic much faster than we anticipated and achieved permanent cost reductions that were more meaningful than we expected.”

Positive news about the development of coronavirus vaccines also helped lift Coty’s stock price. With the progress of a COVID-19 vaccine, it brings us another step closer to being able to have social events. And social events drive cosmetics sales.

The stock price of Coty is up 92.90% over the last month as it reported better-than-expected first-quarter results on November 5. The company had reported an adjusted profit of $0.11, but revenue from continuing operations dropped 20%. Coty especially saw growth in online channels and the company said that its sales have been picking back up over the past quarter. Coty had posted revenues of $1.12 billion and a profit of $122 million, making it the first profitable quarter for Coty in more than a year.

Earlier this week, Seeking Alpha reported that Coty Executive Chairman Peter Harf was buying $150 million in shares from KKR. Those shares were issued July 31.