The Redbubble Ltd (ASX: RBL) share price is up 24% over just the last month but has room to move higher if the analysts at Goldman Sachs are on the money.
On September 19 Goldman's updated its numbers on the online marketplace and came up with a higher valuation.
Redbubble is a Melbourne-based digital business that lets artists or other creative types sell unique products online that are considered outside the mainstream. It also acquired the TeePublic website in November 2018 that contributed $14 million in sales over the quarter to June 30, 2019.
For example artistically designed smart phone cases are popular, alongside trendy T-shirts, wall art, adult apparel, baby wear, stationery, or more general home decor.
Its growing nicely and is popular in California or other regions with more demand for independent products and the household wealth to back it up.
Over FY 2019 it posted an EBITDA (operating income) loss of $4.7 million on "marketplace revenue" of $257 million as it continues to invest heavily in new products and marketplace growth.
It also missed some analysts' expectations over fiscal 2019 due to a slowdown it blamed on changes by Google to its search algorithms affecting organic traffic to the site.
Goldman Sachs notes it has launched five new products recently and expects all its new products to drive stronger growth over the second half of 2019 that includes important shopping periods such as Thanksgiving, back to school, and Christmas.
Goldman's thinks it can deliver a "23% FY19-FY22E revenue CAGR " thanks to "content partnerships, strong app downloads, and focus on membership experience," among other factors.
If achieved this would be impressive and Redbubble should have some operating leverage as revenues rise faster than what should be relatively fixed operating costs.
In fiscal 2019 Redbubble delivered gross transaction value of $328 million and has an aspirational target of delivering $1 billion down the line. It's balance sheet is also reasonably sound.
The company has 256.6 million shares on issue to give it a market value around $390 million that isn't actually that high versus more popular digital marketplaces such as REA Group Limited (ASX: REA), SEEK Limited (ASX: SEK) or another junior rival in Freelancer Ltd (ASX: FLN).
Goldman's has a $1.65 price target on the shares, although they have room to run higher if the group executes on its medium-term objectives of sales and profit margin growth.
I'm not a buyer of shares myself, although it looks one of the better up-and-coming digital or tech businesses on the local market.