Baron Funds: “FIGS Could Double its Revenue Over the Next 3 Years”
Baron Funds, an investment management firm, released its “Baron Focused Growth Fund” first quarter 2023 investor letter, a copy of which can be downloaded here. During the quarter ending on March 31, 2023, the Fund's Institutional Shares exhibited a notable increase of 14.49%. This remarkable performance can be attributed to the resilience and robust demand witnessed by companies held within the Fund's portfolio. Spare some time to check the fund’s top 5 holdings to know more about their top bets for 2023.
In its Q1 2023 investor letter, Baron Focused Growth Fund mentioned FIGS, Inc. (NYSE:FIGS) and explained its insights for the company. Founded in 2013, FIGS, Inc. (NYSE:FIGS) is a Santa Monica, California-based clothing company with a $1.4 billion market capitalization. FIGS, Inc. (NYSE:FIGS) delivered a 26.36% return since the beginning of the year, while its 12-month returns are up by 18.28%. The stock closed at $8.42 per share on June 14, 2023.
Here is what Baron Focused Growth Fund has to say about FIGS, Inc. (NYSE:FIGS) in its Q1 2023 investor letter:
"Figs is the largest direct-to-consumer supplier of scrubs to the medical industry, and its shares underperformed in the first quarter. This was due to customers pulling back on their frequency of purchases, as they are being hurt by the inflationary environment and higher interest rates. Increased promotions, higher freight and fulfillment costs, and higher shipping rates hurt margins. However, the company is still seeing strong customer additions and record reactivations with the brand. We believe headwinds this year should become tailwinds next year. Continued growth in upselling customers into non-scrubs, greater international penetration, and increasing its customer base through new extended size offerings should contribute to growth. Non-scrubs continue to grow at a brisk pace and should be accretive to margins as this product line scales. The company also continues to expand awareness, by leveraging digital marketing, and remains profitable on a first order basis. Its international business is in its infancy with strong results so far in the U.K. and Canada. We believe Figs’ direct-to-consumer model, strong brand, and superior product remain durable competitive advantages. We expect Figs to continue to gain share in the $80 billion global health care apparel market. We continue to believe the company could double its revenue over the next three years and almost triple its EBITDA. The CEO personally bought $5 million of stock recently."
Our calculations show that FIGS, Inc. (NYSE:FIGS) was not able to secure a spot on our list of the 30 Most Popular Stocks Among Hedge Funds. FIGS, Inc. (NYSE:FIGS) was in 18 hedge fund portfolios at the end of the first quarter of 2023, compared to 18 funds in the previous quarter. FIGS, Inc. (NYSE:FIGS) delivered a 43.89% return in the past 3 months.
Last year, we also shared Baron Fund’s Q3 2022 views on FIGS, Inc. (NYSE:FIGS) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q1 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
