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Boxed, Inc. (NYSE:BOXD) shares rallied more than 17% in early Wednesday trading after Wells Fargo analyst Brian Fitzgerald initiated coverage of the stock with an Overweight rating and an $8 per share price target.
Following the initial surge, shares are now trading 8% higher after a pullback.
Boxed is an emerging online retailer of bulk consumables and groceries and an e-commerce enabler offering a combination of software and services to offline/omnichannel retailers.
Fitzgerald told investors in a note that while they believe the vast majority of U.S. consumers are “reasonably well served by existing options for purchasing groceries,” Boxed’s niche in the B2C/B2B market “could represent a multibillion-dollar revenue opportunity.”
The analyst added the company’s “core business serves as a test-bed for BOXD’s software/services offered to retailer partners.” In addition, they see a “large opportunity and solid early validation (AEON partnership in Malaysia, Vietnam) for BOXD as an e-commerce enabler and view shares as an attractive (if speculative) play on global offline/omnichannel retailers’ efforts to leverage tech to drive growth and defend market share.”
“For 2022, we forecast revenue/EBITDA/GAAP EPS of $231MM/($75MM)/($1.72) vs. the Street’s $225MM/($79MM)/($1.53); for 2023, we forecast $334MM/($60MM)/($1.45) vs. the Street’s $316MM/($68MM)/($1.49),” wrote Fitzgerald.
“Our $8 PT is driven by our base-case 10-yr DCF valuation analysis, based on 22% ’21-’33E revenue CAGR, 10% LT Adj EBITDA margin, 12.6% WACC, and 10x terminal EBITDA multiple. Bull/bear scenarios of $1/$17 suggest strong risk-reward.”
