On Thursday, Evercore ISI, a prominent investment firm, initiated coverage on Oddity Tech Ltd (NASDAQ:ODD), a company operating in the beauty and wellness sector.
The firm assigned an Outperform rating to Oddity with a price target of $57.00. The new rating is based on a valuation that includes 4.0 times enterprise value to sales (EV/Sales) and 20 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) on the company's projected 2025 estimates.
Oddity Tech Ltd, known for managing the IL MAKIAGE and SpoiledChild brands, has been recognized as a consumer tech platform that is making waves in the global Beauty & Wellness market. The company has been praised for its robust business model, which boasts a 70% gross margin and a 21% EBITDA margin.
In the fiscal year 2023, Oddity reported a significant year-over-year revenue increase of 57%, reaching $509 million.
The investment firm's coverage points to the company's online-only strategy, which leverages artificial intelligence to offer personalized products, as a key differentiator in the market. Oddity also has potential growth opportunities with the anticipated launch of two new brands in the fiscal year 2025, one of which will focus on acne and skin health.
These initiatives, along with future product innovations from Oddity Labs, the company's biotech research and development center, contribute to the firm's positive outlook.
Despite potential challenges such as competition and the management of future brands, the investment firm's proprietary survey of 1,300 respondents indicates that Oddity's brands enjoy relatively high brand awareness and customer satisfaction. Notably, the survey revealed very high subscription sign-up rates. Additionally, repeat purchase rates for the third-quarter 2022 cohort were remarkably high at 100%, with IL MAKIAGE showing accelerating revenue growth in its oldest market, the United States.
Evercore ISI views Oddity's current valuation as highly reasonable, especially in light of the company's expected 30% or more EBITDA growth over the next three years. This optimistic financial projection is a key factor in the firm's positive rating and price target for Oddity Tech Ltd.
InvestingPro Insights
As we delve into Oddity Tech Ltd's financial health and market performance, InvestingPro data and tips provide a clearer picture of the company's standing. With a market capitalization of $2.15 billion, Oddity Tech is a significant player in the beauty and wellness sector. The company's P/E ratio stands at a high 37.46, reflecting investor expectations for future earnings growth—this is in line with the analysts' anticipation of sales growth in the current year. Moreover, the company's impressive gross profit margin of 70.42% over the last twelve months as of Q1 2023 supports the robust business model highlighted by Evercore ISI.
Despite recent volatility, with the stock price taking a significant hit over the last week (-13.0%) and month (-18.53%), Oddity Tech's liquid assets exceed short-term obligations, indicating a strong liquidity position. Notably, four analysts have revised their earnings upwards for the upcoming period, suggesting confidence in the company's potential to rebound and grow. For investors interested in deeper analysis, there are additional InvestingPro Tips available on the platform, which can be accessed with a special offer. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover more about Oddity Tech’s financial prospects.
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