Is the Temple & Webster Group Ltd (ASX: TPW) share price a big opportunity after the company’s hefty price decline this year?
For readers that haven’t seen it, the Temple & Webster share price has dropped by 60% in 2022 to date.
A quick fall in the share price doesn’t necessarily mean that it’s going to rapidly recover.
However, some brokers think the Temple & Webster share price is now a very attractive opportunity, with price targets that imply significant potential upside over the next year.
Let’s have a look at some of those ratings.
Broker thoughts on the Temple & Webster share price
Credit Suisse currently rates the business as a buy, with a price target of $9.59. That suggests a possible rise of around 120% over the next year on the current price of $4.32. The broker thinks the business can keep growing at a good pace over time.
UBS is another broker that thinks the business is a significant opportunity. It has a buy rating and a price target of $8.20 on the company. That implies a potential rise of around 90%.
Morgan Stanley also has an enticing share price target. This broker rates the business as a buy, with a price target of $9. That suggests a possible rise of around 110%.
The brokers noted a recent trading update by the business.
Is the ASX share still growing?
When the ASX share announced its new website called The Build – where people can buy home improvement products – it also announced a trading update.
It said that in the period of 1 January 2022 to 30 April 2022, its sales had grown by 23% year on year.
With the growing revenue, Temple & Webster is putting that money straight back into the business for more growth, to improve the customer offering, and to increase the company’s operational capabilities.
For example, it said that it’s investing in data, personalisation, augmented reality, artificial intelligence, and logistics.
Temple & Webster says it is leveraging its leadership position to realise scale advantages. What is so good about scale? The company says increased scale provides cost advantages in product sourcing, logistics, and marketing.
By focusing on “exceptional customer service and a great delivery experience” it can drive repeat buying behaviour from customers. The company noted that in the first half of FY22, revenue per active customer grew by 10%, which was the sixth consecutive quarter of growth.
As noted by brokers, Temple & Webster is heavily focused on growth. When it released its HY22 result, the company said:
We will continue to reinvest operating leverage where it makes sense to do so, building strategic moats around the core business while investing into our new growth horizons.
Temple & Webster share price snapshot
Despite dropping heavily over 2022 so far, the Temple & Webster share price has gone up by 2.6% over the last month.
However, it is down 60% over the past 12 months. For comparison, the S&P/ASX 200 Index (ASX: XJO) is down around 5% this year to date and 1% over the past 12 months.