The Temple & Webster Group Ltd (ASX: TPW) share price is having a top run lately.
Temple & Webster shares have rocketed 29.9% from $3.78 at market close on 16 May to $4.91 at the time of writing. For perspective, the S&P/ASX 200 (ASX: XJO) has slid 0.1% in the last two days.
Let's take a look at what's been going on with the Temple & Webster share price.
What's going on?
Investors appear to have been buying up Temple & Webster shares on the back of a positive trading update and broker coverage.
On Wednesday, the retail company revealed the business has returned to year-on-year growth. In the last four weeks, sales have lifted 10% compared to the prior corresponding period (pcp).
Further, the company has confirmed its full-year EBITDA margin guidance of between 3 and 5%.
Temple & Webster has no debt and a cash balance of $100 million.
Company CEO Mark Coulter said:
In the face of turbulent macroeconomic conditions, it's incredibly satisfying to see Temple & Webster back in growth mode as we cycle out of periods impacted by COVID.
We recognised early that in this inflationary environment, customers would be looking for choice and value and we have successfully adjusted our range, promotional activity, pricing and on-site merchandising to reflect these changing customer needs.
The company also highlighted its investments in artificial intelligence (AI). Temple & Webster has boosted its investment in Israeli AI startup Renovai.
Temple & Webster is also using AI to improve 200,000 product descriptions as well as ChatGPT to power all pre-sale product enquiry live chats.
Meanwhile, in response to the trading update, Goldman Sachs analysts are now predicting Temple & Webster can deliver a 23.6% compound annual growth rate (CAGR) between 2022 and 2025.
Goldman has a $6.40 price target on Temple & Webster shares, implying a 30% upside based on the latest share price.
Commenting on the company, Goldman said:
We see a long term structural growth opportunity driven by increasing online penetration and consolidation of online market share.
Share price snapshot
The Temple & Webster share price has gained 5.3% in the last year and 17% in the last month.
This ASX retail share has a market capitalisation of about $600 million based on the latest share price.
