Why FIGS Stock Soared Today

What happened

Shares of FIGS (NYSE:FIGS) jumped 17.1% today after the maker of medical scrubs received a slew of positive analyst notes.

The good news came as the quiet period for analyst coverage lapsed following the company’s IPO in May.

A woman in medical scrubs in a professional setting.

Image source: Getty Images.

So what

At least seven analysts gave FIGS positive ratings this morning, calling the stock a buy or rating it an outperform. Among the analysts weighing in was Piper Sandler’s Erinn Murphy who gave the stock an overweight rating and a price target of $44, just slightly above the $42.61 it closed at today. Murphy said FIGS is “uniquely positioned as a growth brand” and is disrupting the $79 billion medical apparel industry.

Cowen’s John Kernan called the stock an outperform and said the company’s guidance was conservative. Kernan predicted that the company would triple revenue to $1.1 billion by 2025, and its market cap would exceed $8 billion. FIGS closed the day with a market cap of $6.8 billion.

Now what

FIGS has now nearly doubled from its $22 IPO price after the company debuted on May 27. The company offers an interesting opportunity in a corner of the apparel market that’s rarely considered. FIGS’ revenue growth has been impressive, accelerating during the pandemic last year to rise 138% to $263.1 million, following 102% revenue growth in 2019. However, it won’t be easy to sustain a triple-digit revenue growth rate in the apparel industry as the sector doesn’t have the same scalability of, say, the tech sector.

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Even the forecasts of the most bullish analysts indicate that the stock may be ready to take a breather after nearly doubling in less than a month.

 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


View more information: https://www.fool.com/investing/2021/06/21/why-figs-stock-soared-today/

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