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Coty (COTY) Soars 5.2%: Is Further Upside Left in the Stock?

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Coty (COTY - Free Report) shares soared 5.2% in the last trading session to close at $8.07. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 13.6% gain over the past four weeks.

Robust digital trends in the cosmetics space, courtesy of rising online demand especially amid the ongoing pandemic, seemed to have driven the stock higher. Incidentally, Coty’s e-commerce sales surged 40% in the second quarter of fiscal 2021. Apart from this, the company’s robust execution of the fixed cost savings plan and focus on strengthening the prestige business have been boosting investors’ confidence.

Price and Consensus

Price Consensus Chart for Coty

This beauty products company is expected to post quarterly loss of $0.01 per share in its upcoming report, which represents a year-over-year change of +87.5%. Revenues are expected to be $1.08 billion, down 29.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Coty, the consensus EPS estimate for the quarter has been revised 118.5% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on COTY going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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