Beauty stock Coty could have a strong 2023, according to Piper Sandler. Analyst Korinne Wolfmeyer upgraded shares of Coty to overweight from neutral, saying in her 2023 beauty and wellness outlook that the stock is poised to benefit from several macro developments. “Since launching on COTY roughly six months ago, we’ve seen a number of developments transpire and seen the macro environment move in a direction that we think both position COTY well for the next 12+ months and give us greater comfort in pushing this name than we did back in June,” Wolfmeyer wrote in a Tuesday note. Shares of Coty declined 18.5% last year. However, the analyst expects that increasing exposure to China and travel retail will help the stock recover, while doubling down on luxury skincare and fragrance will boost margins for the company. Meanwhile, diversifying the portfolio should protect the firm should consumers start trading down in a recessionary environment. “At a ~5-turn discount to peers and ~3.5-turn discount to 2021 average, and the progress we’re seeing (see scorecard on page 10), we think a narrower valuation gap vs. peers is warranted,” read the note. The analyst’s $10 price target, up from $8, implies the stock can rise more than 16% from Friday’s closing price. Shares of Coty are up more than 2% in Tuesday premarket trading. —CNBC’s Michael Bloom contributed to this report.