Bank of America analysts see an “attractive buying opportunity” in Oddity Tech (NASDAQ:ODD) after the company pre-announced its 3Q23 results.
Just a few days after Truist analysts upgraded Oddity Tech to Buy, their Bank of America colleagues also moved to Buy from Neutral with the price target going to $37 from the prior $60 per share.
“We think the recent pullback in the stock presents an attractive buying opportunity,” BofA analysts said in a note.
ODD shares moved 3.4% higher on the news. The stock is down 16% below its IPO price.
Oddity Tech is a retailer that uses artificial intelligence (AI) to develop products. It yesterday reported preliminary third-quarter results indicating strong revenue growth of 29% to 31%.
This growth is driven by repeat sales at its Il Makiage and Spoiled Child brands. The company, which went public on the Nasdaq in July, had previously anticipated sales growth of approximately 20.5% for the quarter.
While Oddity Tech did not disclose the exact sales figure for the quarter, it reported $68.9 million in revenue during the same period last year. Additionally, the company now expects a gross margin of 68.5% for the quarter, up from its previous guidance of 67.5%, and adjusted EBITDA margins at the high end of its previous range.
For the year, Oddity Tech has seen sales rise by approximately 58% and anticipates adjusted EBITDA of at least $89 million.
“Oddity has purposefully held back its growth by suppressing marketing and limiting its international expansion. Instead, it spent heavily in 1H and is allowing its repeat curve to carry growth for the remainder of the year. This is evidenced by the 3Q preannouncement, with a 10% sales beat and 7% EBITDA beat,” the analysts said.
“We see drivers like ramping marketing spend, new product launches, and new geographic expansion as opportunities to post stronger sales growth. Higher sales growth should drive margins, as incremental revenue offsets investments in launches and marketing.”