10:20 AM EDT, 08/22/2025 (MT Newswires) -- Coty ( COTY ) had a "difficult quarter" but the stock's valuation is still undervalued, RBC Capital Markets said in a Friday note after the company reported fiscal Q4 results late Wednesday.

The company's results were mostly in line with consensus expectations, and its fiscal H1 guidance was "underwhelming," although challenges in this period were expected, RBC analysts said.

On the bright side, even with negative organic growth for the quarter, Coty's ( COTY ) Prestige line continued to perform well with growth in the low single digits, narrowing the sell-out gap in the US high-end fragrance market to 5% from 11% in fiscal Q1, the analysts said.

Meanwhile, Coty's ( COTY ) total like-for-like growth was negative 9% against a market that grew 3%, the analysts said. The gap was driven by the company's move to reduce in-channel inventories and set up a clean baseline, according to the note.

Coty ( COTY ) cited "innovation fatigue" as the major factor in the weaker sales of color cosmetics, while its product messaging have also missed the mark, especially with regard to consumers aged 30 and above, the analysts noted.

RBC analysts said Coty ( COTY ) fundamentals have "vastly been improved" since 2020, warranting higher valuation despite the near-term challenges.

RBC reiterated the company's stock rating at outperform and lowered the price target to $10 from $12.

Price: 3.98, Change: +0.17, Percent Change: +4.33