The Redbubble Ltd (ASX: RBL) share price edged lower in afternoon trading yesterday and finished the day in the red, closing the week at $3.96.
Redbubble shares have been on a rollercoaster ride these past few months, and are swimming in a sea of red when zooming out across the board.
What's up with Redbubble lately?
Redbubble shares had the rug pulled from beneath them when the company released its latest trading update on Thursday.
In its report, the e-commerce company outlined a fairly plain-vanilla set of figures. It showed revenue decreasing by 28% and gross profit slumping by 24% for the quarter ending September 30 2021.
Despite many of its efforts to sustain growth and preserve liquidity, Redbubble's earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell by 85% to just $3.9 million, hurting margins further down its P&L last quarter.
And FY22 guidance didn't offer much of a different story either, with margins expected to compress further next year due to a hike in targeted capital expenditures.
Despite this, the company remains confident of its medium to longer-term opportunity, as it grows its penetration online.
Shareholders punished the company's share price on Thursday, sending it well into negative territory. It closed almost 13% lower in retaliation of the trading update.
Redbubble has had a difficult year to date, so many investors looking for cheap, valuable stocks, may be asking the question – is the Redbubble share price an attractive buy?
One leading broker has weighed in and provided its outlook for the company and investors.
Can the Redbubble share price recover from recent woes?
Analysts at leading broker Morgans appear to believe that is the case, with the broker maintaining its bullish sentiment on the Redbubble share price.
With its latest update, the broker reinstated its add rating to investors.
It reckons investors can see past the short-term headwinds the company faced this quarter. This is despite the online marketplace's sales coming in behind its internal Q3 estimates.
Morgans notes that in the quarter just passed, Redbubble was subject to its harshest trading conditions in recent times on a comparable basis.
This came as the pull-through effect from Covid-induced lockdowns was realised these past 3 months, according to the broker.
Despite the recent challenges, Morgans remains constructive on the company's global footprint, in addition to what it summarises as network and online tailwinds.
These are backed by secular trends observed in the wider marker that are set to take off into the coming decade, as consumer preferences change.
Given these foreseeable tailwinds, Morgans raised its price target on the the Redbubble share price to $4.84, implying an upside potential of 22% from the current market price.
Any gains from here would be welcomed by shareholders. Redbubble shares have fallen 28% this year to date, and 26% in the last 12 months.
