On Monday, Canaccord Genuity maintained a Buy rating on shares of The Lovesac Co. (NASDAQ:LOVE) and increased its price target to $45.00, up from the previous $36.00. The adjustment comes after Lovesac's shares experienced a significant rise, approximately 29%, in November.
According to InvestingPro data, the stock has delivered an impressive 74.55% return over the past year and is currently trading near its 52-week high of $38.94.
The company's performance in the second quarter of fiscal year 2025, which ended on August 4, 2024, showed resilience amidst broader market challenges. With a market capitalization of $587 million and trailing twelve-month revenue of $694 million, Lovesac reported a slight year-over-year increase in revenue, surpassing the midpoint of its guidance range, and its profitability exceeded consensus expectations.
Despite a general downturn in the category by about 12% during the first half of fiscal 2025, Lovesac's results suggest it is gaining market share at a commendable rate.
Lovesac has been actively innovating its product line. Mid-September saw the release of AnyTable, followed by the launch of the Reclining Seat, a new addition to the Sactionals line that incorporates a reclining mechanism. The company is also preparing for a significant product launch in fiscal year 2026.
The revenue outlook for fiscal year 2025 has been slightly adjusted, with the top-end forecast being reduced. However, the company anticipates a roughly 7 percentage point acceleration in growth for the fourth quarter.
The optimism is based on expectations of catching up on delayed shipments of the PillowSac Accent Chair and StealthTech, increasing awareness of new products, and a modest improvement in the category's performance in the fourth quarter compared to the third.
With Lovesac's next earnings report due on December 4, InvestingPro subscribers can access 16 additional investment tips and comprehensive financial analysis to make informed decisions before the announcement.
In other recent news, The Lovesac Co. has been the subject of several analysts' reports. DA Davidson maintained a Buy rating for Lovesac, with a consistent price target of $32.00. The firm's endorsement follows meetings with Lovesac’s top executives, where they identified the company's potential as a high-quality small-cap growth stock.
Moreover, Roth/MKM also maintained a Buy rating for Lovesac and increased its price target to $31.00, citing the company's satisfactory recent performance and optimistic future guidance.
In the second fiscal quarter, Lovesac reported a slight increase in net sales to $156.6 million, but also a net loss of $5.9 million. The company's new product launches, including the PillowSac Accent Chair Frame and AnyTable, contributed to a boost in sales. However, Lovesac experienced a decline in comparable net sales and gross margin.
For the fiscal year, Lovesac has adjusted its sales guidance to between $700 million and $735 million, with an anticipated adjusted EBITDA of $52 million to $59 million.
Despite the mixed results, both DA Davidson and Roth/MKM have highlighted Lovesac's focus on innovation and potential gains from a better housing market as key factors for their positive outlook. These recent developments underscore the company's commitment to growth and innovation amidst challenging market conditions.
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