This has been a rough year to be a growth stock investor. The iShares S&P 500 Growth index has been beaten down by around 22% and many of its components have lost more than half their value in 2022.
When most people see trouble they tend to run first and ask questions later. On Wall Street, though, cool-headed analysts are still enthusiastic about some of the stocks they've been assigned to watch.
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Shares of Lovesac (LOVE 5.38%), Invitae (NVTA 106.67%), and Amyris (AMRS 86.67%) have lost a lot of ground, but analysts up and down Wall Street expect them to recover in big ways. The average target on these stocks is more than triple their recent prices.
Lovesac
Lovesac shares have lost 49% of their value this year even though the underlying business is succeeding in measurable ways. This is why the investment bank analysts who follow the company pinned a consensus price target on the stock that suggests a 230% gain over the next 12 months.
This company may be named after the giant beanbag chairs it sells, but most of its revenue these days comes from sales of modular sectional sofas called Sactionals. Seats, sides, and backs are interchangeable so a customer's first loveseat can expand to accommodate growing needs. With hundreds of replaceable upholstery options, families can even change their appearance to match a new home or remodel.
Demand for premium seating hit a fever pitch amid the most stringent COVID-related lockdowns. Fear of declining sales now that Americans are spending less time at home has been pushing the stock down, even though sales growth is still incredibly strong. During Lovesac's fiscal fourth quarter ended Jan. 30, 2022, sales jumped 51% year over year to $196 million.
Furniture's generally a low-margin business, but not the way Lovesac does it. A Sactional large enough to be called a sofa costs a few thousand dollars, so a lot of that revenue reaches the bottom line. Net income during fiscal 2022 more than tripled year over year to reach $45.9 million. As Lovesac's customers keep coming back to upgrade their Sactionals and replace worn-out upholstery, investors can look forward to steady earnings growth for many years to come.
Invitae
Shares of Invitae are down a stunning 74% this year, but Wall Street analysts think it can rebound. The consensus price target for this diagnostics industry stock represents a 283% premium over its price now.
Invitae is a highly innovative diagnostics provider that wants to bring comprehensive genetic information into mainstream medical practice. Business boomed last year, driving total revenue 65% higher to $460.4 million. In 2022, growth has decelerated with total first-quarter revenue that rose 19.4% year over year to $123.7 million.
Despite a slightly dampened first quarter, management told investors to expect around $640 million in top-line revenue this year. This would be 40% more than the company reported in 2021.
The science of medical genetics is advancing rapidly, but access to personal genetic information is still in its infancy. As Invitae's database grows, the insights its tests provide become more valuable. After billing over a million tests last year, this company's competitive edge has grown significantly.
Amyris
Shares of this synthetic biology business are down by about 55% this year, but Wall Street expects a major recovery. The average price target on this stock suggests a 340% gain could be up ahead.
Amyris engineers develop microorganisms that consume renewable feedstocks like sugarcane and excrete high-value ingredients such as squalane. High-end moisturizers use squalane derived from the livers of millions of sharks that would like to keep their internal organs where they belong. By fermenting squalane in stainless steel tanks, Amyris can produce buckets of the stuff with minimal environmental impact.
Amyris' synthetic biology peers intend to make money by engineering new microorganisms and selling their excretions to third parties. These days, most of Amyris' revenue comes from sales of its own increasingly popular beauty and wellness brands. Led by Biossance and JVN Hair, first-quarter consumer sales rose 121% year over year to $34.6 million.
This stock has been under a lot of pressure because it's currently losing money. Amyris finished March with $288 million in cash after burning through $110 million in the first quarter. However, investors can look forward to improving cash flows in the second half of the year. The company's new, wholly owned manufacturing facility just began production in April. This doesn't guarantee big profits ahead, but it sure gives the company a pretty good chance to start reporting positive cash flows soon.
