Coty (COTY) is expected to deliver fiscal Q4 results within its conservative guidance range, while fiscal 2027 guidance is also likely to remain conservative, with contraction in H1 partially offset by expansion in H2, RBC Capital Markets said Monday in a note.

Coty's share of spending on fragrance is slightly declining but generally stabilized year-to-date, the firm said. Makeup spend has been consistently down but may be showing initial signs of improvement, according to the note.

The company announced in July an agreement to transition the Gucci Beauty license back to Kering for approximately $400 million. Coty will continue to operate the Gucci Beauty brand through at least June 30, 2027, the note added.

The company will use the Gucci transaction proceeds for debt payoff, investment in the core prestige fragrance and beauty portfolio, and organizational optimization, the brokerage said.

RBC expects the first half of fiscal 2027 to remain pressured from ongoing turnaround initiatives, weighing on profit and earnings per share.

RBC kept an outperform rating on Coty with a price target of $8.

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