TD Cowen analyst Oliver Chen maintained a Hold rating on Brilliant Earth Group yesterday and set a price target of $2.20.
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Oliver Chen’s rating is based on a combination of factors that reflect both positive and challenging aspects of Brilliant Earth Group’s current financial standing. The company has shown a positive stock reaction due to its 2Q EBITDA outperformance, driven by a notable increase in total orders and strategic partnerships with cultural icons like Beyoncé and Selena Gomez. Additionally, Brilliant Earth’s investments in experiential retail and virtual try-on technology are commendable efforts to enhance customer engagement.
However, Chen’s Hold rating also considers several risks and challenges facing the company. The decline in average order value by 13% year-over-year highlights a shift in consumer demand towards lower-priced engagement rings, which could impact revenue growth. Furthermore, increased costs related to tariffs and higher gold prices have pressured gross margins, and any changes in tariff rates could exacerbate this issue. The company’s guidance for FY25 assumes current tariff rates, which introduces uncertainty and potential downside risk to their financial performance.