Medical scrubs company Figs is following in the footsteps of names like Nike and Lululemon
Upbeat analysts are putting the newly public medical scrubs company Figs Inc. in the same category as big athleisure names like Nike Inc. NKE,
“Figs is disrupting the innovation-starved and stagnant $12 billion US healthcare apparel industry by re-engineering the core scrubs category, using cues from performance sportswear brands (like Lululemon) to replace low-fashion, ill-fitting incumbents,” wrote Credit Suisse analysts led by Michael Binetti.
Credit Suisse forecasts a 39% revenue increase for Figs between 2020 and 2023 on a compound annual growth range (CAGR) basis.
Net revenue in 2020 was $263.1 million, up from $17.6 million in 2017, a CAGR of 146%.
See: Figs IPO: 5 things to know about the newly public healthcare apparel company
“A unique combination of revenue growth above other category disruption stories (which often prioritize growth over margins) and strong profitability today (in line with quality brands like Nike/Lululemon) make Figs an attractive asset, in our view.
Credit Suisse rates Figs stock as outperform with a $41 price target.
Figs began trading on May 27, with shares soaring more than 28% above the IPO price of $22. The stock was trading at $42.53 on Monday afternoon.
Shares soared 17.1% on Monday after bullish analyst initiations.
“Over our 15-plus years, it is not often that we see a brand become a noun for the product that it represents (e.g., Lululemon, Crocs, Jordans),” wrote KeyBanc Capital Markets analysts led by Edward Yruma.
“We have learned that once you hit this tipping point, and in tandem with
a commitment to innovation, financial results remain strong and prove to be durable.”
KeyBanc initiated Figs shares at overweight with a $45 price target.
“We find many analogues with the development of Lululemon and discuss it at length herein. A notable difference worth highlighting is that Figs has favorable competitive dynamics, and we think that the existing pricing and margin structure can remain intact.”
The Renaissance IPO ETF IPO has slipped 0.2% for the year to date while the S&P 500 index SPX has gained 12.5% for the period.
