Purple Innovation Inc (NASDAQ: PRPL) has executed its turnaround very well, which paves the way for growth over the next few years, according to Bank of America.
BofA’s Curtis Nagle initiated coverage of Purple Innovation with a Buy rating and a price target of $10.
Purple Innovation could continue to generate high revenue and earnings growth between 2020 and 2022, backed by new product rollouts, strong marketing and the addition of new wholesale partners, Nagle said in the note.
He added that higher average selling prices and improvements in the manufacturing and supply chain could also boost the company’s revenue and earnings growth.
Purple Innovation has improved its manufacturing, distribution and sourcing operations over the past year and a half, which has significantly boosted its profitability and overall production capacity, the analyst mentioned.
Nagle further said that the company’s business was now more scalable and could support nearly $700 million in sales by the second quarter of 2020. He wrote, “We think this is particularly important in growing the wholesale segment which could potentially double over the next few years.”
Industry conditions seem to be “conducive to growth” for Purple Innovation and “we see several potential tailwinds,” the analyst said.
Shares of Purple Innovation were trading higher by 2.63% at $7.80 at time of publication Tuesday.