Coty (COTY) could remain under investor pressure until its new strategy shows clearer results, though steadier fragrance demand, cautious guidance, lower leverage and a low valuation may support the stock over time, RBC Capital Markets said in a note Monday.

Coty's fiscal Q3 results are likely to be a neutral event, with results expected to come broadly within the company's conservative outlook range and the company is expected to stay cautious with fiscal Q4 guidance as its turnaround plan is still being developed and the broader operating backdrop remains uneven, the investment firm said.

Investors will focus on interim CEO Markus Strobel's strategy, including plans to put more resources behind larger brands, key markets and projects with stronger growth potential, RBC said.

Other beauty and luxury companies offered mixed signals, though fragrance remains a stronger category and global beauty demand still appears resilient, according to the note.

RBC kept its outperform rating and $8 price target saying that Coty's stock looks undervalued compared with peers, but added investors may need more evidence of progress before sentiment improves.

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