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Why Figs Stock Was Climbing on Monday

By Brett Schafer - Updated Jun 28, 2021 at 5:07PM

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Wall Street is getting increasingly bullish on this new IPO.

What happened

The stock of direct-to-consumer (DTC) healthcare apparel company Figs (FIGS -6.67%) climbed as much as 16% during trading hours on Monday, and as of 3:50 p.m. EDT, the stock was up 12.4%. The recent IPO has gotten multiple bullish notes from Wall Street analysts in the past week. Since its IPO in late May, Figs is up over 60%, making it one of the top-performing stocks over that time period.

Two healthcare workers  in blue scrubs are sitting at a desk.

Image source: Getty Images.

So what

Wall Street analysts have become increasingly bullish on Figs over the past week. For example, Oppenheimer's Jason Helfstein recently put a buy rating on the stock with a price target of $45 a share. Now, Figs trades at $49 a share.

Investors and analysts are likely bullish on Figs because of the cult-like following it has built within the healthcare apparel market. It has grown revenue at an impressive 146% rate over the past four years and generated $58 million in operating income in 2020. Plus, with the consistent replenishment needed for nurse scrubs (Figs' largest product category), the company can bank on customers continually coming back and shopping with them. 

Now what

While this 60% run likely has current Figs investors happy, this doesn't mean it is time to go all-in on the stock. At a market cap of $7 billion, Figs has a trailing price-to-sales (P/S) ratio of 26.6 and a trailing price-to-free-cash-flow (P/FCF) over 300. Figs is growing quickly, but it may be time to exhibit patience after the recent surge in the stock price.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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