Why Coty Shares Are Shooting Higher Today

Following the sizzling debut of its Burberry Goddess scent and other blockbuster releases, Coty Inc. COTY has confidently amped up its FY24 forecasts.

The company is now expecting core LFL sales growth in the first half of FY24 of +10-12% (prior view: +8-10%). 

Two of Coty's fragrance innovations are among the top five of the Fall. Coty now has three fragrance lines in the U.S. top ten.

Also Read: Coty Renews License Agreement With Adidas

This strength is supporting Coty's increased FY24 core LFL sales growth outlook of +8-10%, up from its earlier guidance to be at the top end of its medium-term target range of +6-8%.

Coty continues to target modest gross margin expansion in FY24 and 10-30 bps of adjusted EBITDA margin expansion, implying adjusted EBITDA of approximately $1.075 billion-$1.085 billion at current FX rates (prior view: $1.065 billion-$1.075 billion).

The company remains on track to drive leverage towards 3x exiting CY23, fueled by seasonally strong free cash flow generation, and towards 2.5x exiting CY24.

Also See: Coty Divests 3.6% Stake In Wella Brand For $150M

The company is dedicated to providing a best-in-class medium-term growth algorithm. This includes aiming for a mid-20s% EPS CAGR, which is driven by profit expansion, reduced interest expenses, and a future goal of managing share count towards 800 million. They are also focused on active deleveraging and specific capital returns.

In the last reported quarter, Coty's sales were driven by consistent momentum in both divisions, supported by robust global demand across categories, geographies, and channels.

Price Action: COTY shares are trading higher by 5.48% premarket at $12.10 on the last check Wednesday.