W.Many publicly traded companies have made impressive gains, with beauty care giant Coty (CotyUnfortunately, the COVID-19 pandemic has forced millions to stay indoors, and in doing so has fundamentally demotivated the broader personal care segment. . Still, with the increasing trend of normalization, including the return to the office, beauty care may be making a comeback. I am bullish on COTY stocks.
In contrast to the memestock phenomenon that prompted investments seen as toxic speculative investments, Coty suffered a sharp drop in market value during the 2020 downturn. Pre-pandemic price levels. The unfortunate trigger comes down to the lack of incentives for personal care.
According to the American Psychological Association, 42% of adults in the United States report unwanted weight gain, with an average weight gain of 29 pounds. Stuck in a sedentary and isolated environment for weeks and months, it’s fair to say that her COTY strain suffered a tragic loss of relevance.
When the turmoil finally subsided for the fiscal year ending June 30, 2020, Coty’s revenues were $4.72 billion, down 25% from the prior year. To make matters worse, Coty posted his $4.63 billion in sales in his 2021 fiscal year, down nearly 2% year over year.
Still, there may be light at the end of the tunnel.
Return to office beckons COTY shares
December 2020 Editorial Washington Post It aptly described the new normal as the American worker’s pajama moment. If this narrative plays out, it could potentially be a big win for COTY stock.
First, the economy is slowing and soaring inflation is weighing on consumer spending. As a result, many companies have been forced to furlough their employees, a terrifying reality for office warriors. They are losing the power they once held over their employers in the unique dynamics underlying the big resignations.
By logical reasoning, it’s reasonable to expect worker bees to make less of a fuss, such as their take-or-leave attitude toward telecommuting privileges.
Second, the subsequent return to the office, along with other high-traffic in-person events and venues, should have a very positive impact on COTY’s equity and appearance-related investments. With COVID-19 so feared in the rearview mirror, people are expected to physically interact with each other. Thus, the incentive to look good is finally back, and it’s never too late for Coty.
The proof is in the COTY stock numbers
Now analysts can go on and on about the big picture that could catalyze a particular publicly traded company. However, when it comes to COTY inventory, the proof is in the numbers.
According to Coty’s latest Form 10-Q for the quarter ended March 31, 2022, net revenues were $1.19 billion, up 15% year over year. But his $726.4 million Coty’s Prestige segment accounted for his 61.2% of total sales for the quarter. Compared to the previous year, Prestige accounted for 58.5% of total sales.
Additionally, for the nine months ended March 31, 2022, Prestige, which aggregates the company’s top brands, including Kylie Cosmetics, generated $2.6 billion in revenue and accounted for 63% of total sales. Prestige accounted for 60% compared to the previous year.
It may be a small difference, but it is still important as it can imply a shift in consumer behavior. As COVID-19 easing restrictions encourage people to re-engage in pre-pandemic social activities, there may be greater incentives to be your best. This may be the catalyst COTY stocks have long sought.
Wall Street’s commitment to COTY
Turning to Wall Street, COTY stock has a moderate buy consensus rating based on 7 buys and 7 holds allocated over the past three months. Coty’s average price target is $10.73, suggesting a 41.7% upside potential.
Are COTY shares traded?
While it’s understandable that the COVID-19 crisis has taken the lives of COTY stocks and their ilk, the market still appears to be pricing in an environment where social interaction remains restricted. That may not be the case if the easing of mitigation measures has allowed people to reconnect with the larger society. In this burgeoning environment, contrarians may want to consider adding Coty to their radar.
The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.