NTCO - Natura & Co. could benefit from Aesop spinoff - BofA

Bank of America upgraded Natura & Co. ( NYSE: NTCO ) to Buy from Neutral on Tuesday, advising clients that its exploration of strategic actions offers significant upside.

Specifically, equity analyst Robert Aguilar argued that a spinoff of luxury cosmetics and skincare brand Aesop could be a major positive. According to Bloomberg, both LVMH ( OTCPK:LVMUY ) and L’Oreal ( OTCPK:LRLCY ) are interested bidders for the business.

“Aesop growth has averaged about 20% over the last 3 years in constant currencies, despite the pandemic, and initial efforts in China suggest considerable room for growth,” Aguilar explained. “We believe a potential Aesop transaction could be followed by efforts to rein in losses and exit unprofitable markets at both Avon and The Body Shop, and we do not rule out the possibility of wider strategic considerations.”

He raised his price target to $22 from a prior $20 alongside the upgrade to Buy.

Seeking Alpha’s Quant team, by contrast, rates the stock a Sell .

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