ODDITY Tech Is Game-Changer In Beauty & Wellness — Analyst Praises 40M+ User Base And Machine Learning Recommendations

Truist Securities analyst Youssef Squali initiates coverage on ODDITY Tech Ltd. ODD with a Hold rating and $54 price target.

The analyst views Oddity as a crucial disruptor in the Beauty & Wellness industry, a $600 billion TAM with two powerful DTC brands, IL Makiage and SpoiledChild (more brands coming in 2025).

The analyst applauds the company's solid user base of 40 million+ customers, on which it can leverage its proprietary consumer data to provide highly relevant product matching and recommendations directly.

Each brand makes recommendations to consumers through proprietary consumer-facing machine learning apps, which narrow down products based on a set of questions to consumers, mentions the analyst. 

Squali estimates ODD to compound top-line growth at ~20% with 20%+ AEBITDA margins for several years, outstripping growth in both eCommerce and the Beauty industry.

Amid a broader e-Commerce environment that is growing in the mid to high single digits (analyst's estimate), Oddity has grown at 60%+ over the last two years and should grow at 40%+ in 2023, the analyst adds.

The analyst is also optimistic about the company's planned launch of Brand #3 and #4 in 2025, providing an additional growth runway. 

Overall, the analyst estimates a 2024-2031 (7-year) revenue CAGR of ~17%, reaching ~$1.681 billion in 2031, with adj. EBITDA is getting $461 million in 2031 (27% margin).

Price Target: ODD shares are trading lower by 11.78% to $46.21 on the last check Monday.