UPDATE: Raymond James Starts The RealReal Inc. (REAL) at Outperform (correction)
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Raymond James analyst Rick Patel initiates coverage on The RealReal Inc. (NASDAQ: REAL) with a Outperform rating and a price target of $9.00.
The analyst comments "We initiate coverage on Rent the Runway (RENT) with an Outperform rating and $9 target price. RENT operates a “closet in the cloud” enabling consumers to rent apparel through subscriptions. We view RENT as well-positioned to benefit from long-term themes that include the shift towards Digital, the Shared Economy, and ESG. Our proprietary consumer survey work shows robust demand in these areas. Awareness is low for RENT and its offering and therein lies the opportunity to fuel outsized Revenue +50% (est.) in 2022 followed by >20% growth in 2023 and beyond. Nearterm, we think the COVID re-opening and consumers’ focus on value during inflation can be tailwinds. With rising interest rates, the market is sensitive to companies with negative EBITDA margins (-5.4% in 2022E for RENT), but achieving profitability is one of RENT’s biggest priorities, and we see it making strong progress. We view its roadmap to EBITDA profitability in 2-4 quarters as achievable. Valuation is also attractive at 0.03x growth-adjusted EV/Revenue vs 0.05x for peers."
Shares of The RealReal Inc. closed at $2.97 yesterday.
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