Lovesac Sitting on High Upside Potential By TipRanks

Quo Vadis Capital President John Zolidis added Lovesac (LOVE) to his conviction list, following a conference call with the company. “Our call is that there is a ton of growth here, with 1,000 to 1,500 bps of EBITDA margin expansion potential, which could lead to the stock doubling to quadrupling,” Zolidis said. That’s a very bullish statement for stock that has already moved up close to 53% YTD.

I am bullish on Lovesac stock.

Multiple Catalysts for Lovesac Shares

The Connecticut-based furniture maker had many catalysts pushing its shares higher in the last month, including strong Q2 financials that beat analyst estimates and helped the company turn free cash positive.

“Across nearly every key operating metric, Lovesac’s quarterly results affirm the fundamental efficacy of our disruptive home furnishings model, the competitive advantages of our diversified supply chain and resulting strong in-stock positions, along with growing brand awareness,” said Shawn Nelson, Chief Executive Officer, following the release of Q2 financial results. “To that end, our very strong second-quarter performance marks 14 consecutive quarters of 25%+ sales growth with profitability nicely ahead of expectations driven primarily by lower promotions and fixed cost leverage on this quarter’s 65% sales increase.”

Additionally, there are more catalysts ahead, including a product announcement in the middle of October and an investor meeting on October 19. “With near-term catalysts, a robust growth rate, and a long-term opportunity for this business to be much larger and more profitable than it is today, we believe LOVE shares are very attractive and are adding it to our LONG list,” added Zolidis.

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Wall Street’s Take

Wall Street seems to be on the same side as Lovesac’s CEO and Quo Vadis President. The company’s shares have gained 52.7% YTD, compared to the 14.5% gain of the .

Apparently, Wall Street is getting very excited about the company’s exponential sales growth and new product introductions.

Then there’s the fact that the company has turned free cash flow positive, meaning that Lovesac is in an excellent position to pursue policies to enhance shareholder value, like dividend payouts and stock buybacks.

The TipRanks stock-rating system doesn’t seem to support Wall Street’s enthusiasm for Lovesac’s stock. Instead, it assigns a Smart Score of 6, citing very negative Investor Sentiment and Insider Selling.

Analysts’ Take

Lovesac has a very narrow analyst following. Only three analysts followed its shares in the last three months, but they rate the stock a Strong Buy, with an average Lovesac price target of $104.00. The high forecast is $105.00 and the low forecast is $102.00. The average price target represents a 52.56% change from the last price of $68.17.

Only time will tell whether Zolidis and the three other analysts following the stock are right to be so bullish on…