Morgans initiates coverage on Step One Clothing with an Add rating and price target of $3.20. In the field of underpants, the broker believes a design has been developed that addresses all the company’s targeted issues around comfort and freshness.
Underwear is made of organically grown bamboo fabric, with a 3D elastic pouch stitched at the front for support and two elastane panels on the inner thigh to combat chafing. Launched in Australia and the UK in 2017 and 2020, explosive growth in sales has been achieved.
The next frontier is the US (launched October 2021) and the analyst believes there is a ready market globally. The company sources bamboo only from forest stewardship council (FSC)-certified forests, while bamboo itself has a lighter environmental impact than cotton.
Sector: Commercial Services & Supplies.
Target price is $3.20.Current Price is $2.86. Difference: $0.34 – (brackets indicate current price is over target). If STP meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
