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Coty Completes Wella Divestment to Refocus on Fragrances

Coty Inc. (COTY) is among the best fundamentally strong penny stocks to buy according to analysts. On December 19, Reuters reported that Coty Inc. (NYSE:COTY) had sold its remaining 25.8% ownership in Wella, a multinational hair care and cosmetics brand, to KKR in a $750 million transaction, while retaining a share of proceeds from any sale or IPO in the future.

Coty Inc. (NYSE:COTY) stated that it is entitled to 45% of any proceeds from a sale or IPO of the business after KKR’s preferred return is achieved, and intends to utilise the upfront cash to pay off its debt. Due to intensifying competition from newer brands, the company went through challenges over the last few years, particularly in the mass beauty segment. With that said, the company initiated a strategic review and considered selling the business to fully concentrate on its fragrances segment earlier this year. This refocus stems from the continuously declining demand for colour cosmetics, Reuters noted.

Africa Studio/Shutterstock.com

Thus, the company stated that the divestiture brings an end to the 5-year-old program to streamline both its offerings and operations. Coty Inc. (NYSE:COTY) acquired Wella from Procter & Gamble in 2015, as part of a $12.5 billion agreement for P&G’s beauty business.

On December 17, Citi slashed the price target on Coty Inc. (NYSE:COTY) to $3.50 from $4.25 and maintained a ‘Neutral’ rating, according to TheFly. The firm revised several targets in the beverages, household, and personal care sectors to better reflect its 2026 outlook.

Coty Inc. (NYSE:COTY) is a New York-based provider of branded beauty products worldwide. Founded in 1904, the company operates through two segments: the Prestige and Consumer Beauty.

While we acknowledge the potential of COTY to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than COTY and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None.

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