Coty (COTY) is expected to report fiscal Q3 results in line with consensus, with management potentially guiding toward the low end of its full-year outlook due to ongoing consumer weakness and cautious retailer activity, RBC Capital Markets said in a note Thursday.

"Expectations for COTY are very low given general sentiment around beauty and last quarter's second consecutive downward guidance revision," the firm said.

RBC expects fiscal Q3 net sales of $1.304 billion versus the consensus estimate of $1.314 billion, and is aligned with earnings forecasts of $0.06 per share. The firm views the quarter as a "neutral event" and continues to see fiscal 2025 as a "reset year" for the company.

While tariff pressures and mixed global fragrance trends may weigh on results, RBC believes Coty shares are undervalued at current levels.

"While [Coty] is going through a reset year in 2025 and beauty growth is normalizing, we believe that shares are undervalued given company fundamentals, forward growth drivers that are in place, and a category that is still growing +MSD%," according to the note.

RBC highlighted Coty's fragrance business as an "advantaged category" and pointed to both geographic and category white space as potential growth drivers over the longer term.

The firm has an outperform rating on the stock with a price target of $13.

Price: 5.03, Change: -0.02, Percent Change: -0.40