BofA Stays Neutral on Coty Ahead of 2026, Cites Consumer Uncertainty and Valuation Gaps

Bank of America (BofA) has reaffirmed a Neutral stance on Coty Inc. (COTY) as investors and the company look toward 2026. The research team cited persistent uncertainty around consumer spending growth and a pronounced valuation divergence across the beauty sector as reasons for maintaining caution. Rather than trimming or upgrading the rating, analysts are taking a wait-and-see approach until clearer top-line and margin signals emerge.

Coty, a major player in fragrances, cosmetics and skincare, faces a mixed backdrop. On one hand, brand-strength initiatives, portfolio pruning and cost-efficiency programs have been highlighted as potential drivers of margin recovery. On the other, macro headwinds—chiefly uneven consumer demand and variable market dynamics across regions—make near-term revenue growth unpredictable. BofA’s assessment suggests that while structural improvements are possible, they are not yet sufficiently visible to warrant a bullish repositioning.

Valuation disparities within the beauty industry also factor into the bank’s view. Some peers trade at premiums driven by stronger growth profiles, faster digital penetration or more resilient margin expansion, while others languish on the back of weaker sales or integration challenges. Coty sits in the middle of that spectrum, which supports a Neutral rating until the company demonstrates sustainable progress versus higher-growth competitors.

BofA is watching several potential catalysts that could prompt a reassessment: consistent sequential sales improvements, durable margin expansion driven by cost or mix benefits, successful product launches, or material progress in key international markets. Conversely, slower-than-expected consumer spending, renewed promotional pressure, or currency and supply-chain disruptions could keep sentiment muted.

For investors, the implication is clear: Coty may offer selective opportunities, particularly if individual initiatives begin to translate into measurable results, but the stock lacks an immediate clear upside trigger in the bank’s view. BofA’s stance reflects a preference for evidence of durable operational momentum before shifting to a more positive rating as 2026 approaches.