Direct-to-consumer healthcare apparel and lifestyle company FIGS, Inc. (FIGS) made a stellar stock market debut on May 27, 2021. Its shares soared nearly 29% in price that day, valuing the company at $4.57 billion. FIGS has also raised its revenue outlook for its fiscal 2021. Its revenue is expected to be $410 million this year, versus a $395 million previous expectation.

However, the stock has lost 26.4% in price over the past month and 41% over the past three months to close yesterday’s trading session at $22.94, after hitting its 52-week low of $22.43.

Its shares plunged after the announcement of the retirement of its CFO Jeffrey Lawrence on December 10. Also, FIGS faces competition from smaller manufacturers, such as Scrubs & Beyond and Jaanuu. So, its near-term prospects look uncertain.

Here is what could influence FIGS’ performance in the upcoming months:

Broad Product and Services Portfolio

FIGS’ offerings include a scrubwear assortment that consists of approximately 13 styles. It also offers lifestyle apparel and non-scrubwear offerings, such as lab coats, activewear, loungewear, compression socks, masks, and face shields.

It launched its  jogger bar in the third quarter to help healthcare professionals to navigate to one location on its website to see all its joggers and styling ideas to help find the right match. In addition, it rolled out a model selector on its website in the third quarter, which allows customers to visualize better how certain products look across different body types and sizes.

Mixed Financials

For the third quarter, ended September 30, 2021, FIGS’ net revenues increased 33.7% year-over-year to $102.70 million. The company’s average order value increased 3% year-over-year to $102, while its active customers came in at 1.70 million, up 57.6% year-over-year. However, its net income decreased 64% year-over-year to $6.95 million. Also, its EPS was  $0.03, representing a 75% year-over-year decline.

Stretched Valuation

In terms of forward non-GAAP P/E, FIGS’ 116.30x is 426.2% higher than the 22.10x industry average. The stock’s 5.14x forward non-GAAP PEG is 175.6% higher than the 1.86x industry average. In addition, its forward EV/S and P/S of 9.49x and 9.10x, respectively, are higher than the 5.81x and 6.94x industry averages.

POWR Ratings Reflect Uncertainty

FIGS has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. FIGS has a C grade for Value, which is consistent with its higher-than-industry valuation ratios.

The stock has a D grade for Momentum, which is in sync with its 26.4% loss over the past month and 26.9% decline over the past six months. It has a D grade for Stability, consistent with its beta of 1.97.

FIGS is ranked #33 out of 44 stocks in the Specialty Retailers industry. In addition to the POWR Rating grades I have just highlighted, we have also rated the stock for Growth, Sentiment, and Quality. Get all the FIGS ratings here.

Bottom Line

Although FIGS has a unique business model, the healthcare apparel industry has low barriers to entry. The stock is currently trading below its 50-day and 200-day moving averages of $34.29 and $37.62, respectively, indicating a downtrend. It also looks overvalued at its current price level. So, we think it could be wise to wait for a better entry point in the stock.

How Does FIGS, Inc. (FIGS) Stack Up Against its Peers?

While FIGS has an overall POWR Rating of C, one could check out these A-rated (Strong Buy) stocks within the same industry: Destination XL Group, Inc. (DXLG), The Cato Corporation (CATO), and The Aaron's Company, Inc. (AAN).

Click here to checkout our Retail Industry Report for 2021

FIGS shares rose $0.06 (+0.26%) in premarket trading Friday. Year-to-date, FIGS has declined -23.58%, versus a 25.98% rise in the benchmark S&P 500 index during the same period.

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

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