Lovesac Sitting on High Upside Potential By TipRanks
John Zolidis, Quo Vadis Capital president, added Lovesac to his convictions list after a conference call. Zolidis stated that the company believes there’s a lot of potential growth, and has 1,000-1,500 bps EBITDA margin expansion. This could result in stock nearly quadrupling. That’s a very bullish statement for stock that has already moved up close to 53% YTD.
Lovesac stock is my favorite.
Multiple Catalysts to Lovesac shares
The shares of the Connecticut furniture company were driven higher by many factors, including Q2 strong financials which beat analyst expectations and made the company free cash-positive.
Shawn Nelson, chief executive officer, stated that Lovesac’s Q2 results “assert the fundamental efficacy and competitive advantages of its disruptive home furnishing model, our diverse supply chain, strong in-stock positions along with growing brand awareness.” To that end, Lovesac’s second quarter results are 14 straight quarters of sales growth of at least 25%. Profitability is well above expectations due to lower promotions and fixed costs leverage (65% quarter sales rise).
Additional catalysts are expected, with a product announcement scheduled for the middle of October as well as an investor meeting set for October 19. Zolidis said that LOVE shares offer attractive opportunities because they have near-term catalysts and can grow at a rapid pace. There is also a long-term potential for the business to become much bigger and more profitable.
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Wall Street Take
Wall Street is on the same side with Lovesac’s CEO, and Quo Vadis President. The shares of this company have increased 52.7% year-to-date, as opposed to 14.5% for the.
Wall Street seems to be very enthusiastic about the company’s rapid sales growth and brand new products.
Lovesac’s company turned positive on its free cash flow, which means that it is now in a great position to implement shareholder-value enhancement policies like stock buybacks and dividend payouts.
Wall Street isn’t enthusiastic about Lovesac stock stock rating system TipRanks. Instead it gives the stock a Smart Score 6, which is negative for Insider Selling and Investor Sentiment.
Lovesac is a small stock with a limited analyst base. In the three-months that Lovesac has been followed by analysts, only three of them have done so. They rate the stock as a Strong Buy with an average Lovesac target price of $104.00. The forecast high is $105.00 and low is $102.00. This average price target is 52.56% higher than the $68.17 last price.
It will be interesting to see if Zolidis, the other analyst following Lovesac stock stock, are correct in being so bullish.
Disclosure: Panos Mourdoukoutas was the owner of shares in Lovesac at the time this article was published.
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