AI beauty solutions developer Perfect Corp. sees target price upgraded after acquisition of competitor

Zacks Small-Cap Research (Zacks SCR) has raised its target price for Perfect Corp., a smaller company that develops AI solutions for the beauty and fashion industries, by almost 15% as it believes the company’s recent acquisition of a competitor significantly expands its capabilities. The acquired company is Wannaby, a virtual try-on platform previously owned by luxury online retailer Farfetch. Wannaby’s clients include such names as Lululemon, Dolce & Gabbana, and Diesel.

Details

Zacks SCR has set a new target price of $3.51 per share for Perfect Corp. stock. This is 14% above the previous target price of $3.07 per share and 47% above the last closing price yesterday, Monday, January 13.

Last week, the company announced the completion of its acquisition of Wannaby. According to Zacks SCR, this move expands Perfect Corp.’s capabilities, product offerings, and customer reach, particularly in footwear, bags, scarves, and apparel, which Perfect’s platform previously did not support.

Zacks SCR expects Wannaby to boost Perfect Corp.’s top line by about $2 million or even more if its cross-selling efforts prove to be successful. For the full-year 2024, the company earlier guided for 12-14% growth in revenue compared to 2023, when the top line stood at $53.5 million. Zacks SCR expects Perfect Corp. to release its 2025 guidance in about a month and a half.

According to MarketWatch, among the three analysts covering Perfect Corp., there are two “buys” and one “hold.” Their average target price of $3.77 per share suggests upside of more than 47%.

About the deal and the companies

Perfect Corp. develops AI and AR solutions for the beauty and fashion industries, catering to both brands and retail consumers. Its platform provides virtual skin diagnostics, cosmetics recommendations, and eyewear try-ons. The company also offers several apps under the YouCam brand allowing users to virtually try on different hairstyles and makeup, or change clothes in photos. In 2023, Forbes dubbed Perfect Corp. founder Alice Chang the “godmother of virtual makeup” for this technology.

Perfect Corp. dominates its niche: it serves over 400 of the world’s largest cosmetics brands, and its apps have been downloaded by retail customers more than a billion times, as noted by Zacks SCR last year.

Perfect Corp. believes the acquisition of Wannaby further solidifies its competitive position. Wannaby’s previous owner, luxury goods marketplace Farfetch, belongs to the “Amazon of South Korea,” Coupang, which has a market capitalization on the Nasdaq of more than $39.2 billion. Farfetch and Coupang, both users of the Wannaby platform, will become Perfect Corp. clients, Zacks SCR notes. Other Wannaby’s partners include Lululemon, Dolce & Gabbana, Diesel, Valentino, Reebok, and Allbirds.

The price of the acquisition has not been disclosed. Zacks SCR recalls that Farfetch acquired Wannaby in 2022 for $30 million. It believes that Perfect Corp. bought the company at a lower price due to declining sales in the luxury goods market.