Beauty-tech company Perfect Corp. seen as undervalued, with 70% upside

Perfect Corp’s technology allows users to virtually try on hair colors and makeup. Photo: perfectcorp.com

Perfect Corp., a developer of AI-based solutions for the beauty and fashion industries, has been spotlighted by Zacks Small-Cap Research (Zacks SCR) as being significantly undervalued. Its stock should trade, based on a conservative valuation, at $3.07 per share, indicating nearly 67% upside from the closing price on Tuesday, November 5.

Details

Zacks SCR values Perfect Corp. at $3.07 per share. It arrived at this valuation by taking half the average enterprise value-to-sales ratio in Perfect Corp.’s peer group of AI-based software-as-a-service (SaaS) companies. Zacks SCR looked at 10 industry players, including well-known firms like Zoom.

For these companies, the average EV-to-forecast sales ratio for 2024 is 4.90, versus Perfect Corp.’s 0.60. Zacks SCR conservatively estimates that the multiple should be at least half the SaaS industry average, or 2.45. This yields a share price of $3.07 amid a market value of $312 million, on Zacks SCR’s numbers. On November 5, Perfect Corp. stock closed at $1.84 per share, for a market capitalization of $187.4 million.

Zacks SCR sees Perfect Corp. as positioned to significantly accelerate revenue growth in the near future. This summer, the company launched PerfectGPT, an AI assistant that Zacks SCR believes could replace many of the functions of a salesperson in a store and enhance customers’ online shopping experience. The Perfect Corp. management expects that prestige brands will begin testing PerfectGPT early next year.

About Perfect Corp.

Founded in Taiwan in 2015 by Alice Chang, who was dubbed the “godmother of virtual makeup” by Forbes, Perfect Corp. develops AI and AR solutions for the beauty and fashion industries, catering to both brands and retail consumers. Its suite of tools includes virtual skin diagnostics, cosmetics recommendations, and eyewear try-ons. The company’s popular YouCam apps allow users to “try on” different looks in photos and change backgrounds.

In the first nine months of 2024, Perfect Corp. saw its bottom line slide 2.2% year over year to $3.9 million on revenue of $44.3 million, which was up 12.5%. For the full year, the company guides for annual revenue growth of 12-14% to $53.5 million.