Wolfe Research initiates coverage on Figma stock with Peerperform rating

Investing.com - Wolfe Research initiated coverage on Figma Inc (NYSE:FIG) with a Peerperform rating and a fair value range of $15-$70, citing the company’s strong growth and market positioning. According to InvestingPro data, the company is currently trading above its Fair Value, with analysts forecasting 37% revenue growth for FY2025.

The research firm highlighted Figma’s impressive 46% growth rate, strong free cash flow margins of 28%, and high customer retention rates exceeding 90% overall and 96% for customers spending over $10,000. The company maintains robust financial health with an exceptional gross profit margin of 88.5% and a healthy current ratio of 3.54.

Wolfe Research noted that Figma has achieved a significant milestone by becoming an industry standard for product designers while successfully expanding its user base, with two-thirds of users now being non-designers and one-third developers.

The firm pointed to Figma’s expansion strategy through products like FigJam, Dev Mode, Figma Make, Buzz, Sites, and Slides, which has yielded sustainable net revenue retention rates exceeding 120%.

Despite Figma’s current valuation representing approximately a 200% premium to peers, with a Price/Book ratio of 36.2x, Wolfe Research suggested significant upside potential if the company can capture a double-digit share of what could be a $100 billion-plus total addressable market, similar to established software giants like Adobe and Salesforce. While the stock has declined 33% over the past six months, InvestingPro subscribers can access 10 additional investment tips and detailed financial metrics to make informed investment decisions.

In other recent news, Figma Inc has been the focus of multiple investment firms initiating coverage on its stock. Piper Sandler has given Figma an Overweight rating, highlighting the company’s growth potential with a price target of $85.00. The firm emphasized Figma’s unique platform and extensive customer base as reasons for its positive outlook. Meanwhile, Morgan Stanley started coverage with an Equalweight rating and set a price target of $80.00, pointing to Figma’s competitive edge in real-time collaboration for digital product development. RBC Capital also initiated coverage with a Sector Perform rating and a $75.00 price target, acknowledging Figma’s potential in AI despite some investor concerns. Both Goldman Sachs and JPMorgan initiated coverage with Neutral ratings, with price targets of $48.00 and $65.00, respectively. These firms noted Figma’s role as a comprehensive platform that integrates design and development workflows. Overall, these recent developments underscore Figma’s position as a significant player in the design software industry.

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