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Investing.com - JPMorgan initiated coverage on Figma Inc (NYSE:FIG) with a Neutral rating and a $65.00 price target on Monday, below the current trading price of $77.30.
The financial services firm described Figma as a browser-based platform enabling designers, developers, project managers, and marketers to design user interfaces. JPMorgan noted that Figma has established itself as the core system of record across design-related workflows due to its multiplayer, extensible, and interoperable architecture. The company maintains impressive gross profit margins of 88.5%, according to InvestingPro data.
Figma has achieved "Rule of 70" results in 2024, with revenue currently exceeding a $1 billion run-rate. With a market capitalization of $38.7 billion and last twelve months revenue of $821 million, the company’s core product is already considered an industry standard, and it hosts a well-established annual user conference with strong attendance.
JPMorgan highlighted that Figma’s success stems from strong network effects, where designers adopt it for ease-of-use and functionality, while developers can convert design concepts into coded products. The company’s newer products help integrate upstream and downstream design workflows.
The firm indicated that investors will likely debate Figma’s forecasted revenue growth deceleration and gross margin compression, potentially concluding that revenue growth should ideally maintain at least 30% for an extended period to support its current premium valuation.
In other recent news, Figma has priced its initial public offering at $33 per share, with trading set to begin on the New York Stock Exchange. The offering includes about 37 million shares, with Figma offering 12.47 million shares and existing stockholders selling 24.46 million shares. DA Davidson analysts have shown optimism about Figma’s public listing, calling it an "ideal IPO candidate" and highlighting its potential to lead future software IPOs over the next year and a half. RBC Capital has initiated coverage on Figma with a Sector Perform rating, noting the company’s potential in the AI space despite some investor concerns. Meanwhile, Piper Sandler has given Figma an Overweight rating, emphasizing the company’s growth potential, differentiated platform, and extensive global reach to over 450,000 customers. These developments come as Figma prepares to enter the public market with a projected market capitalization between $14.6 billion and $16.4 billion. The IPO is expected to close on August 1, pending customary conditions.
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