FIGS (FIGS) is surpassing expectations, but its revenue outperformance has already been reflected in its soaring stock price, which has more than doubled in the past six months, leading to an "uninviting" risk-reward profile, Morgan Stanley said in a Monday note.
The company has posted impressive revenue acceleration, boosting year-over-year growth from 8% in Q3 to 33% in Q4, the analysts said. The improved performance has been understood by the market, as shown in the 108% stock price increase in the last six months.
Morgan Stanley's analysis implies that the company's stock would need earnings before interest, taxes, depreciation, and amortization to grow by about 40% per year for three years and trade at over 20 times its projected 2028 multiple for upside of 28%, which is a "high bar for minimal upside," the analysts said.
The analysts believe growth may continue to be elevated throughout the rest of the year despite their concerns that their projected negative scenario is more likely to occur than the positive.
Morgan Stanley maintained the company's stock rating at equal-weight and raised the price target to $15 from $8.
Price: 14.40, Change: +0.18, Percent Change: +1.27
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