Analysts surveyed by FactSet are looking for adjusted earnings of 34 cents per share on revenue of $2.35 billion. During the same quarter last year, the New York-based beauty company earned an adjusted 38 cents per share on revenue of $1.21 billion.
"The top line likely sees meaningful organic declines as both the core Coty portfolio and the P&G beauty portfolio suffer from integration-related distractions, compounding headwinds from fundamental challenges facing categories and ongoing micro-oriented improvement initiatives," KeyBanc Capital Markets analysts wrote in a recent note.
In October, Coty closed its merger with Procter & Gamble's (PG - Get Report) specialty beauty business. In its most recent earnings report, the company said closing the deal and combining the two businesses came at a cost.
"The resources which normally work on the business, have also been working on closing the transaction...The resulting distraction as well as the recent change in management teams in our headquarters, regions and countries," Coty Chairman Bart Becht said at the time, adding that this contributed to a decline in first-quarter revenue and profit.
Improved fundamentals on both sides of the newly combined businesses is critical to convincing investors that the new structure can work and deliver on deal promises, KeyBanc analysts said.
"Given what we see as a lengthy integration timeline and even more extended period before transaction benefits (full realization of synergies, etc.) hit the P&L, if Coty wants to convince the investment community that its go-forward plan is viable, it first must improve fundamentals across both portfolios," they noted.
KeyBanc does not see catalysts to drive significant upside to shares into the earnings report.
Last week, the company completed its acquisition for a 60% stake in Younqiue, an online peer-to-peer social selling beauty platform. The $600 million deal comes as Coty looks to expand its e-commerce efforts.
Shares of Coty, which owns Sally Hansen and Rimmel London, were roughly flat at $19.47 at the start of trading on Wednesday. The stock is down more than 30% in the past six months.