FIGS is an American healthcare apparel brand based in California. The company primarily sells scrubs as well as a number of other products for healthcare professionals in the industry. FIGS Stock has recently reversed some of its losses suffered earlier this month, now trading 23% higher for the month of March. So why is FIGS Stock recovering?
FIGS released “very strong” Q4 results last week, highlighting a better than expected gross margin and revenues beating Wallstreet expectations. Credit Suisse analyst Michael Binetti noted the Q4 results highlighted “a significant margin upside despite unprecedented industry margin pressures”. As a result of the companies strong Q4, Wallstreet maintains a bullish stance on FIGS stock with an average target of $31.30.
Why is FIGS Stock outperforming?
For 2021, the company generated a record $419.6 million, an increase of 59.5% year over year. To understand why the companies revenues are growing, its important to understand the product. FIGS focus on technically advanced apparel specifically for healthcare workers. According to the company, its apparel focuses on comfort, durability, function and style, at an affordable price.
With COVID-19 continuing to play a role in the need for greater healthcare staffing, FIGS is positioned in a unique market. Furthermore, the proof remains in the companies repeat purchase numbers, currently up 68% in 2021. In addition, the company is also moving into lifestyle clothing to expand its range of products on its digital shop front. Overall, both the companies positioning and its product are underlying catalysts that are driving upside in Wallstreet targets on FIGS Stock.
FIGS Provides Strong 2022 Forecasts
For the remainder of 2022, FIGS expect to generate $550 Million – $560 Million in revenue while maintaining a 70%+ gross margin. These forecasts are surprisingly bullish considering wider market concern about 2022 growth, which will only benefit FIGS investors if they can deliver on these numbers. Looking long term, the company sets its eyes on a $1 Billion Revenue target by 2025.
“We continue to transform and expand the healthcare apparel industry and have a tremendous runway of growth ahead of us. We are more confident than ever in our ability to harness our unique strengths to drive towards $1 billion-plus in net revenues by 2025. As we continue to scale at a rapid rate, our focus remains on executing against our strategic initiatives to drive long-term sustainable growth and profitability”.FIGS Q4 2021 | SHAREHOLDER LETTER
Barclays and Piper Sandler remain Upbeat on FIGS Stock Outlook
Following the companies Q4 results, Barclays and Cowen notably outlined upside in the FIGS Stock Outlook. Firstly, Barclays analyst Adrienne Yih set FIGS stock price target to $34 from $38 but keeps an Overweight rating on the shares. The analyst noted that the company’s Q4 results delivered slight sales upside and a meaningful earnings beat, primarily driven by better than expected gross margin pressure. The target from Barclays implies a 70% upside from the current trading price.
On the other hand, Piper Sandler analyst Erinn Murphy lowered the firm’s price target on Figs to $36 from $45 but also keeps an Overweight rating on FIGS stock. Murphy highlighted that the company added more customers in Q4 than ever before and plans to add more new customers in fiscal 2022 than in 2021. The $36 target remains one of the streets highest, implying an upside of 80%.
The Bottom Line
Overall, FIGS has a differentiated product that targets a market in high demand. The proof is in FIGS numbers however investors will be holding the company to its strong growth forecasts for 2022-2025. In addition, the Curren targets discussed in this article see an upside in FIGS stock however price targets can be over inflated at times. Practising caution in this type of market is essential, especially as high investor expectations will equate to greater price volatility.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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