TD Cowen analyst Oliver Chen maintained a Buy rating on Brilliant Earth Group (BRLT – Research Report) today and set a price target of $3.50.
Oliver Chen’s rating is based on several factors. Firstly, Brilliant Earth Group’s net sales growth of +2.5% was lower than the market’s +7.1% prediction due to slower than anticipated normalization of bridal trends. Consequently, BRLT has revised its FY23 sales guidance downwards by (6%) at the midpoint, which now indicates 4Q growth of +4.5% Y/Y. However, Chen notes that BRLT continues to gain market share and outperformed the jewelry sector’s sales growth by over +1000bps in 3Q, with the bridal segment of the total market declining by (DD%) Y/Y.
Secondly, the company added +5 showrooms in 3Q, bringing the total to 37. This expansion includes a new focus on malls while simultaneously managing a (7.5%) Y/Y decrease in inventory levels. Despite this encouraging growth, Chen is cautious about the higher marketing investments, which are near high-20% of sales, compared to the long-term algorithm prediction of mid-high teens% of sales. He reaffirms his ‘Buy’ rating due to BRLT prioritizing brand awareness and maintaining an Outperform rating with a $3.50 Price Target on 0.5x FY2 EV/S.
In another report released yesterday, KeyBanc also reiterated a Buy rating on the stock with a $6.00 price target.
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Brilliant Earth Group (BRLT) Company Description:
Brilliant Earth Group Inc is an innovative, digital-first jewelry company. It offers exclusive designs with superior craftsmanship and supply chain transparency, delivered to customers through a highly personalized omnichannel experience. It focuses on one operating and reporting segment which is retail sale of diamonds, gemstones and jewelry.
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