FIGS: Recent Momentum Will Likely Fade As Reduced Discounting Limits Upside

Our FIGS fair value estimate increases to $9.53 from $8.78 as analysts lift price targets following stronger than expected Q3 results, sustained business momentum signals, and a more constructive view on the brand's long term earnings power.

Analyst Commentary

Street research on FIGS has turned more constructive overall, with several firms lifting price targets and initiating positive coverage following the company’s strong Q3 performance and improving demand indicators.

Bullish Takeaways

• Bullish analysts highlight robust Q3 execution and sustained business momentum, supporting a series of upward price target revisions that narrow the perceived discount to intrinsic value.
• Positive readouts from recent management meetings point to healthy underlying demand trends and confidence that first half 2025 strength can extend into the second half, reinforcing the durability of the growth trajectory.
• The brand’s positioning in the U.S. healthcare apparel market, combined with a debt free balance sheet, is cited as a key underpinning for upside to long term earnings power and balance sheet resilience through cycles.
• Some valuation frameworks are being recalibrated to reflect a higher quality of earnings, with bullish analysts assuming better margin sustainability and more measured promotional activity, which supports higher justified multiples.

Bearish Takeaways

• Bearish analysts, despite modestly raising price targets, continue to see limited upside at current levels, arguing that the recent re rating already prices in much of the near term fundamental improvement.
• Concerns remain around the potential impact of reduced discounting on unit growth and customer acquisition, with skepticism that recent performance can be extrapolated if promotional intensity normalizes lower.
• Some remain cautious on execution risk as FIGS scales, questioning whether the brand can maintain its current growth pace and margin profile in a more competitive and promotion sensitive environment.
• This more conservative camp maintains valuation assumptions that embed slower top line growth and less operating leverage, leading to lower fair value estimates relative to more optimistic peers.

What's in the News

• Raised full year 2025 guidance and now expects net revenue growth of approximately 7% year over year, compared with a prior outlook of low single digits (Corporate Guidance).
• Completed its August 8, 2024 share repurchase program, retiring 9,872,547 shares (5.83% of shares outstanding) for a total of $48.01 million, with no additional shares repurchased in the July 1 to September 30, 2025 tranche (Buyback Tranche Update).
• Expanded its partnership with Team USA by committing to outfit more than 150 healthcare professionals at the Milano Cortina 2026 Olympic and Paralympic Winter Games, marking the first time the Team USA Medical Team will be fully outfitted at a Winter Games (Client Announcements).
• Unveiled its new FIBREx fabric innovation in the Team USA Winter Games collection, designed to be lightweight, structured, soft, and durable for use from hospital floor to city streets to mountain environments (Client Announcements).

Valuation Changes

• Fair value estimate increased moderately from $8.78 to $9.53 per share, reflecting a more constructive view on long term earnings power.
• Discount rate inched up slightly from 8.64% to 8.64% on a more precise calculation, leaving the risk profile effectively unchanged.
• Revenue growth remains essentially flat at approximately 7.03% annually, indicating no material change in top line growth assumptions.
• Net profit margin is effectively unchanged at around 7.52%, suggesting stable expectations for profitability and operating efficiency.
• Future P/E has risen meaningfully from 35.7x to 38.8x, implying a higher valuation multiple being applied to FIGS’ projected earnings.