What Happened?
Shares of beauty products company Coty (NYSE: COTY) fell 10% in the afternoon session after the company reported mixed first quarter 2025 results which significantly beat analysts' EBITDA expectations, but revenue and EPS missed (though organic revenue beat). Organic sales in the Prestige segment dipped 2.5%, reflecting softer fragrance demand and a tough comparison from blockbuster launches last year, while Consumer Beauty sales fell 5% organically due to continued weakness in color cosmetics. Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. The areas below expectations seem to be driving the move.
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What The Market Is Telling Us
Coty’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 9.3% on the news that Bank of America analysts issued a rare double downgrade on the company, shifting their rating from Buy to Sell, signaling a significant deterioration in their outlook. Alongside the downgrade, the firm slashed its price target from $9 to $4.50. The analysts pointed to declining market share, an indication the company was losing ground to competitors, and persistent softness in consumer spending, which could pressure both top-line growth and profitability.
Coty is down 32.6% since the beginning of the year, and at $4.63 per share, it is trading 58.6% below its 52-week high of $11.18 from May 2024. Investors who bought $1,000 worth of Coty’s shares 5 years ago would now be looking at an investment worth $938.13.
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