BofA Maintains Neutral Stance on Coty (COTY) Heading Into 2026 Amid Uncertain Consumption Growth and Sector-Wide Valuation Disparity

Coty Inc. (NYSE:COTY) is one of the cheap penny stocks to invest in. On December 19, Bank of America lowered the firm’s price target on Coty to $3 from $3.50 and maintained an Underperform rating on the shares. Heading into 2026, the primary uncertainty for consumer staples is the trajectory of consumption growth. While valuations vary widely across the sector, the firm suggests that there is currently no compelling reason for investors to end their neutrality.

On December 12, TD Cowen also lowered the firm’s price target on Coty to $3.75 from $4 with a Hold rating on the shares. The firm revised its valuation model to account for updated revenue growth targets, specifically highlighting a cautious outlook for H1 2026. The firm identified several headwinds, including post-holiday inventory destocking at major retailers and a saturated promotional environment that may compress margins. The report also pointed to sustained pressure within the mass cosmetics category as consumers shift toward value-oriented spending.

Earlier on November 25, Rothschild & Co Redburn initiated coverage of Coty with a Neutral rating and $3.60 price target. The firm acknowledged potential upside for Coty shares but concluded that the stock’s risk-reward profile remains unattractive at current levels. The firm also expressed concern over heightened uncertainty regarding broader category growth and a lack of transparency surrounding the company’s ongoing strategic review.

Coty Inc. (NYSE:COTY), together with its subsidiaries, manufactures, markets, distributes, and sells branded beauty products worldwide. It operates through two segments: the Prestige and Consumer Beauty.

While we acknowledge the potential of COTY as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.