The Redbubble Ltd (ASX: RBL) share price spent a day in the green today following positive news from a prominent broker.
After zipping to an intraday high of $1.335, shares in the e-commerce company closed 16.67% higher at $1.33.
Broker slaps a buy rating on Redbubble shares
Investors were driving up the Redbubble share price higher following an updated broker note.
As reported in the Australian Financial Review, the team at UBS upgraded Redbubble shares to a "buy" rating and lifted the company's price target by 10% to $1.60 per share.
UBS analysts touched on the attractive opportunity currently presenting Redbubble shares, saying:
Given the extreme level of investor disinterest in the name, combined with a valuation multiple implying further downgrades and a short interest position of over 4%, we think a FY22 result which meets or potentially beats consensus expectations, combined with an improved July sales update will be a positive catalyst for the share price.
UBS added that the company's sales and margin trends could be better than what the market expects.
The report stated that "channel checks with US print-on-demand peers suggest digital marketing costs have not materially worsened".
Furthermore, a challenging microenvironment is putting pressure on smaller peers to focus on preserving cash rather than investing in marketing activities.
Nonetheless, UBS believes that Redbubble shares are grossly undervalued at the current price. From where it trades today, this represents an upside of more than 20%.
The company is scheduled to report its full-year results on Wednesday, 17 August.
Redbubble share price snapshot
Despite today's gains, the Redbubble share price has slumped 60% over the past 12 months.
The company's shares hit a low of 77.5 cents in June before moving onto an upwards trajectory.
Redbubble commands a market capitalisation of around $366.9 million.
