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Investing.com - Morgan Stanley (NYSE:MS) initiated coverage on Figma Inc (NYSE:FIG) with an Equalweight rating and a price target of $80.00 on Monday. According to InvestingPro data, Figma currently trades at a significant premium to its Fair Value, with impressive gross profit margins of 88.5%.
The investment firm identified Figma as the industry standard in product design software, highlighting its competitive advantage in real-time collaboration that accelerates digital product development. Morgan Stanley noted that Figma serves as the platform connecting design and development, allowing users to consolidate workflows across multiple stakeholders. While the company isn’t currently profitable, InvestingPro analysis shows strong financial health with a current ratio of 3.54, indicating solid liquidity.
The research firm estimated Figma’s total addressable market (TAM) at approximately $26 billion, with the company currently penetrating only about 4% of this potential market. Morgan Stanley pointed to significant growth opportunities as Figma expands beyond UX designers to developers, marketers, and product managers.
Morgan Stanley acknowledged Figma’s favorable positioning in the generative AI space, particularly with its recently launched Figma Make product in Q2, while noting the increasingly competitive market for AI prototyping tools could impact Figma’s market share.
The firm highlighted Figma’s business model has enabled a "Rule of 65%" in fiscal year 2024, comprising 48% year-over-year revenue growth at approximately $750 million scale and 17% operating margin.
In other recent news, Figma has announced the pricing of its initial public offering at $33 per share, with trading set to begin on the New York Stock Exchange. The offering includes approximately 37 million shares, with Figma offering 12.47 million shares and existing stockholders selling 24.46 million shares. Additionally, various financial firms have initiated coverage on Figma’s stock. Goldman Sachs and JPMorgan both rated Figma with a Neutral rating, setting price targets at $48 and $65, respectively. RBC Capital also initiated coverage with a Sector Perform rating and a $75 price target, highlighting Figma’s potential in AI. Piper Sandler provided an Overweight rating, citing the company’s growth potential and setting a price target of $85. These developments reflect a range of perspectives from financial analysts regarding Figma’s market position and future prospects.
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