03:07 PM EDT, 08/21/2025 (MT Newswires) -- Coty ( COTY ) provided a "soft" initial outlook for its fiscal 2026, though the beauty company has the potential to continue outperforming peers, RBC Capital Markets said in a note e-mailed Thursday.

Late Wednesday, the company said it expected a "gradual" improvement in year-over-year profit trends from the 2025 fiscal fourth quarter. First-quarter adjusted earnings before interest, taxes, depreciation, and amortization is seen falling at a mid-to-high teens percentage, while second-quarter adjusted EBITDA is expected to drop at a low-to-mid teens percentage. Coty ( COTY ) said it expects a return to adjusted EBITDA growth in the second half of 2026.

The initial outlook was "soft" relative to expectations, RBC said in a client note. "Coty's ( COTY ) guidance commentary implies a tale of two halves with (first-half) pressure and back-half weighted growth," the brokerage wrote. "Investors are not typically fans of back-half weighted guidance."

The company's shares were down nearly 22% in Thursday late-afternoon trade. The stock has lost 45% in value so far this year.

Coty's ( COTY ) performance in recent months shows that it's not immune from general category pressure, RBC said. Over the last several years, it has consistently outperformed rivals, with many of the factors that have resulted in the stock's recent underperformance out of the company's own control, according to the note.

"With (over) 50% of the company's revenues coming from prestige fragrances and optionality with various other growth levers, we see opportunity for Coty ( COTY ) to continue outperforming peers," the brokerage wrote. "We believe in the management team's ability to effectively manage the business."

RBC has an outperform rating and a $12 price target on the Coty ( COTY ) stock.

"With financial strength, strategic execution, proactive management of underperforming areas, and organizational discipline, Coty ( COTY ) is primed to win in a promising but dynamic beauty landscape." Chief Executive Sue Nabi said in a statement late Wednesday.

The company's fiscal fourth-quarter adjusted net loss widened year over year to $0.05 a share from $0.03, while revenue fell to $1.25 billion from $1.36 billion. Analysts polled by FactSet were looking for adjusted EPS of $0.01 on revenue of $1.21 billion.

"Consumer demand for beauty continues to be solid, particularly for fragrances across price points and formats," Coty ( COTY ) said in the statement. "At the same time, broader macroeconomic and tariff uncertainty is fueling cautious retailer ordering and a more promotional competitive environment."

Price: 3.83, Change: -1.04, Percent Change: -21.30