DB Coty Aug 21

Rating Company Date 20 August 2026 Hold Coty, Inc. North America Reuters Bloomberg Rating Hold COTY.N COTY US Price target (USD) 3.00 United States Price at 19 Aug 26 3.03 52-week range 15.69 – 1.85 Consumer Consumer Staples Valuation & Risks

Signs of Progress...But FY27 Remains a Transition Year Steve Powers Research Analyst Key takeaways from COTY's FY4Q26 results Christopher Barnes, CFA COTY shares declined -9% today (S&P 500 -0.9%) despite a better-than-expected Research Analyst FY4Q26 print yesterday evening, which we believe reflects investor wariness around the timing and magnitude of COTY’s future potential recovery of positive sales momentum and profitability. For the quarter itself, LFL sales (-1% vs. Nikhil Jain, CFA Research Associate DBe/ST: -6.0%/-4.7%) and adjusted EBITDA ($94M vs. DBe/ST: $90M/$89M) both exceeded expectations, helped by stronger-than-expected U.S. customer orders across prestige fragrances and mass cosmetics, as well as a more modest Middle Angeline Goh East headwind (~1% vs. anticipated 2-3%). That said, management also Research Associate repeatedly characterized FY27 as a transition year and declined to provide formal

FY27 guidance. Instead, management provided only a 1Q27 framework calling for a -LSD to -MSD LFL sales decline, an adjusted gross margin down -50 to -100 bps, adjusted EBITDA down a low-teens percentage, and adjusted EPS (excluding the Key changes equity swap) of $0.11-$0.13, while noting that: (i) sell-out trends remain below Price target (USD) 2 3 50% category growth and (ii) improvement is expected to occur gradually over time. Source: Deutsche Bank

Looking ahead, management reiterated confidence that Coty.Curated initiatives are beginning to gain traction, pointing to improving trends across several key Consumer Beauty brands, a return to growth in Brazil, SKU rationalization efforts (~20% reduction with negligible expected revenue impact), ongoing cost-savings opportunities, and a potential ~$30M tariff refund as a source of additional upside. At the same time, however, management cited consumer uncertainty, Middle East volatility, oil prices, and the timing of sell-out improvement as key risks. While management stopped short of issuing FY27 guidance, it did target sequential improvement through the year and an objective of delivering FY27 EBITDA and free cash flow broadly in line with FY26 levels. That said, the absence of a formal full-year outlook, the ongoing Consumer Beauty strategic review (targeted for completion by calendar year-end 2026), a forthcoming CFO transition, and management's expectation for only gradual near-term progress are likely to leave investors debating the pace and durability of any recovery longer-term. As such, we expect the focus to remain on whether improving sell- out trends can ultimately translate into sustained shipment growth, narrowing market share gaps, and improved earnings visibility ahead of the larger FY28 Gucci transition. While management expressed confidence that planned restructuring actions can mitigate the profit impacts associated with the loss of Gucci, investors will likely require additional detail before underwriting that outcome.

Deutsche Bank Securities Inc. IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

Our FY27 assumptions now contemplate LFL sales declining -0.5% (vs. -0.9% previously) and adjusted EBITDA of $805M (vs. $787M previously), reflecting early signs of improving sell-out trends, stabilization across key U.S. Consumer Beauty brands, and expected benefits from Coty.Curated productivity initiatives. Our price target increases to $3 (from $2), reflecting improved near-term earnings expectations and a roll-forward in time, but we remain Hold rated. To that end, while recent developments are encouraging, we see several important elements of the investment story as…