I gotta be honest, I didn't think there was a way to make scrubs fashion trendy, but FIGS (FIGS) has become the trendy play for scrubs. That's not all the company produces and sells through its direct-to-consumer platform though. FIGS also offers lab coats, under scrubs, outerwear, activewear, loungewear, compression socks, footwear, masks, and face shields. This sounds a lot like a COVID shopping list.
There's solid demand for their products as well. The company generated $101.1 million in revenue last quarter, a growth rate of 57.6%. Active customers grew 79.2% year-over-year, reaching 1.6 million. This generated a profit of $0.08 per share on an adjusted basis. After the recent IPO, the company has $164 million in cash on the balance against no debt.
This company is competing for a chunk of the $79 billion healthcare apparel industry. The last three years saw a compound annual growth rate around 120%. Expectations going forward are more in the neighborhood of 30% to 50% as the company captures more of the market, but we just witnessed a 79% year-over-year quarter, so those expectations feels like a low bar right now.
With the push over $43 today, shares appear to be headed back to the $50 area. We have a double bottom formed over the past month, giving us a W-shaped price pattern. Those are bullish setups. With the stock well above the 21-day and 50-day simple moving averages (SMA), we don't have those as resistance. In fact, we don't have much resistance until $46, then again at $50. Secondary indicators are tracking along with price, so we don't have a bullish divergence to play on here, but we do have confirmation.
Until we see a slowing in the Delta variant, one would expect sales to remain in the growth category well above the 30% to 50% longer term trajectory. That should be enough to push us back to the upper $40s, if not $50, from here. Additionally, the longer term setup could make this a billion dollar revenue company within the next 18 to 24 months, which is why I'm in the buy and hold category here as a buyer of shares under $44.
