These Recent IPOs Are Nice End-of-Year Stocking Stuffers
With the holidays fast approaching and shares of these stocks at post-IPO lows, eager investors would do well to add Arhaus, Inc (NASDAQ: ARHS) and Allbirds (NASDAQ: BIRD) to their watchlists if not their portfolio. The two are well-placed within their respective industries and benefiting from secular tailwinds that should continue to blow for several years. With the analysts bullish on these names, we see the opportunity for high double-digit gains in the near term and for triple-digit returns in the long.
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Arhaus, Inc. To Gain At Least 20%
Arhaus, Inc is a manufacturer and omnichannel retailer of home goods and furnishings ranging from furniture to bedding and outdoor entertainment. The company IPO’d to little fanfare despite the strength seen within the industry and share prices have been moving lower in the time since. The takeaway for us today is that the post-IPO quiet period ended and the analysts are speaking out. Piper Sandler analyst Peter Keith called the stock out for its growth and market-capture potential. He noted the company’s growing brand awareness and increasing footprint when setting his Overweight rating and price target of $16.
Piper Sandler isn’t the only analyst to come out with commentary. At least 9 sell-siders have come out with coverage and most are bullish. There is one hold rating but to us initiating at Hold is as good as a buy but the salient point is the consensus on price. The Marketbeat.com consensus price target is $14 and assumes about 47% of upside for the stock. This compares to the 18$ high price target set by Barclay’s which implies about 80% of upside and the low price target of $12 which itself implies about 20% of upside. In our view, if this market moves above $14 it will go well above $18 before it’s all said and done.
Allbirds Not Immune To Volatility
Popular shoe and apparel brand Allbirds saw its share price pop in the wake of its oversized IPO but volatility was quick to set in. Now, two weeks later, the stock is trading at record lows and looking like it might move lower. The catch is that the analysts have come out with a wave of positive commentary on this stock as well, commentary that we see pushing prices above the current all-time high. Keybanc analyst Edward Yruma summed it up nicely in his report citing the three factors we ourselves are drawn to; the compelling offering, the omnichannel business model, and the brand.
At least 12 analysts have come out with commentary on the stock and none are bearish. There are three Holds but again, a Hold or Neutral is as good as a Buy when coverage is initiated because you can’t hold what you don’t own. The Marketbeat.com consensus rating is a firm Buy with a price target near $25. The Marketbeat.com consensus price target assumes about 33% of upside for the stock and even the low price target of $21 assumes some upside is coming. The high price target of $30, held by Guggenheim and near the post-IPO high, implies about 60% of upside and is more in line with our own view of the stock and retail industry. Retail and consumer discretionary are expected to be among the top performers in 2022.