After experiencing a substantial 50% surge in its stock price since last month's IPO, Oddity Tech Ltd (NASDAQ:ODD), a tech-focused retailer specializing in beauty and wellness, was initiated at several Wall Street firms today.
BofA Securities initiated coverage on the company with a Neutral rating and a price target of $60.00.
According to the bank, there is a potential for Oddity to leverage its machine learning algorithms and AI-backed technology to capture share from legacy players. However, the stock has demonstrated strong performance, gaining around 50% since its IPO on July 18, and its valuation compared to traditional beauty brands may limit opportunities for multiple expansion.
Goldman Sachs initiated coverage on the company with a Neutral rating and a price target of $59.00, expecting revenue/EBITDA to grow at a 26%/40% CAGR from 2022 to 2026.
“This growth potential, however, does not appear to be lost on the market as reflected by the company’s premium valuation versus established beauty peers (e.g., its 34X CY24E P/E compares to EL at 30X and L’Oreal at 30X). We view this is a fair valuation as we balance ODD’s superior near-term growth outlook against its less-proven track record; hence our Neutral rating,” mentioned Goldman Sachs.
Meanwhile, JMP Securities initiated coverage on the company with a Market Outperform rating and a price target of $66.00.
According to the firm, Oddity, which is bringing the beauty market online by creating an equivalent, if not better, digital experience for each stage of the beauty buying process, has a significant opportunity to take share in the $400b billion+ beauty industry that remains 78% offline and is dominated by brands with indirect, wholesale relationships with customers.
Shares closed with more than an 11% loss today.