PRPL - Purple Innovation stock gains 37% on raised outlook as efforts to manage costs pay off

Purple Innovation ( NASDAQ: PRPL ) stock gained ~37% to a five-month high on Thursday after the firm posted better-than-expected Q3 results and raised its outlook for FY adj. earnings as its efforts to manage costs pay off.

In an earnings call , CEO Robert DeMartini said the company implemented manufacturing and supply chain efficiencies, and rightsized organizational overhead and marketing spend to align with the current demand environment.

The firm now expects 2022 adj. EBITDA of $2M-$7M vs. prior outlook of adj. EBITDA loss of $15M-$5M.

"Management is cautious about Q4 profitability due to expensive advertising rates during the holidays, and expectation of increased discounting for Black Friday and Cyber Monday promotions, which is expected to negatively impact gross margins," Purple Innovation ( PRPL ) noted. It reiterated its 2022 revenue outlook.

Truist raised its estimate for 2022 EBITDA to a gain of $5.8M from a loss of $11M, and 2023 EBITDA to $17.2M from $7M.

"Results reinforce the bottoming trend seen in the mattress industry, but we remain Hold," said analyst Keith Hughes. "No new information on the proposed take private deal from Coliseum was given. We maintain a higher bid from them or a competitor will be needed to get the deal completed."

Raymond James reaffirmed its Market Perform rating Purple Innovation ( PRPL ) and raised its Q4 adj. EBITDA estimate to $1.4M, up from -$0.8M.

"We believe the Purple product is unique and has the potential to gain market share, especially given management's initiative to expand its price point offering," said analyst Bobby Griffin.

Craig Hallum upgraded Purple Innovation ( PRPL ) to Buy from Hold and raised its PT to $6 from $4 (~76% potential upside to last close).

While sell-side ratings on Purple Innovation ( PRPL ) are largely bullish , SA Quant rates the stock Hold .

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