Cricut Inc (CRCT – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst on November 7. Analyst Mark Altschwager from Robert W. Baird remains neutral on the stock and has a $10.00 price target.
Mark Altschwager has given his Hold rating to Cricut Inc based on a blend of factors. The third quarter results for Cricut were a mixed bag, with some positive aspects such as significant gross margin improvement for machines, healthy cash flow, and steady user engagement growth. However, these positives were somewhat offset by a number of concerns including conservative inventory planning by retailers ahead of the holiday season, pressure on consumers, and the need for the company to get more aggressive with pricing to attract new users. Consequently, Altschwager has revised down his 2023 estimates due to a cautious Q4 outlook.
While Altschwager acknowledges some encouraging signs, such as earnings stabilization, he believes the risk/reward ratio at the current valuation is balanced. This is primarily due to the uncertain macroeconomic environment, which is impacting the company’s top-line visibility. The Q3 results revealed some areas of concern, such as lower-than-expected accessory and material sales and pressure on gross margins due to a need to remain price competitive. Looking ahead, while the company is investing in innovation and user engagement, Altschwager predicts that subscriber growth will likely remain under pressure until machine sales see a significant upswing. With demand visibility still low, he expects the company’s shares to remain range-bound in the near term.
In another report released on November 8, Citi also maintained a Hold rating on the stock with a $10.00 price target.
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Based on the recent corporate insider activity of 29 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CRCT in relation to earlier this year.
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Cricut Inc (CRCT) Company Description:
Cricut Inc designs and builds a creativity platform that enables users to turn ideas into professional-looking handmade goods. With its connected machines, design apps and accessories, and materials, the users create everything from personalized birthday cards, mugs, and T-shirts to large-scale interior decorations. It derives revenues from three segments including Connected machines, Subscriptions, and Accessories and materials. It derives maximum revenue from the Accessories and Materials segment through the sales of Cricut EasyPress, hand tools, machine replacement tools and blades, project materials such as vinyl and iron-on, and sales of a la carte digital content purchases, including fonts, images, and projects.
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