What Happened?
Shares of beauty products company Coty (NYSE:COTY) jumped 7% in the afternoon session after WWD (Women's Wear Daily) reported that the company is exploring a potential sale. Sources suggested the company was in the very early stages of discussions to potentially sell off its business in two parts, separating its luxury division from its consumer division. This report raised investor optimism about a potential valuation increase for Coty.
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What The Market Is Telling Us
Coty’s shares are somewhat volatile and have had 14 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 biggest move we wrote about over the last year was 2 months 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 26.5% since the beginning of the year, and at $5.05 per share, it is trading 51.7% below its 52-week high of $10.44 from July 2024. Investors who bought $1,000 worth of Coty’s shares 5 years ago would now be looking at an investment worth $1,001.
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