Purple Innovation is downgraded at BofA after passing on MYA offer

Bank of America moved back to an Underperform rating on Purple Innovation (NASDAQ:PRPL) after the company rejected an unsolicited acquisition offer by Coliseum Capital Management at $4.35 per share

In particular, analyst Curtis Nagle and team are skeptical that PRPL’s initiatives including higher priced products, owned store expansion and efforts to improve wholesale productivity will lead to above market growth. Cost cutting efforts and margin tailwinds are expected to fade for PRPL later this year.

“Over the past year Purple has made substantial progress getting back to positive EBTIDA and shoring up the balance sheet through an equity offering. However, we are skeptical that PRPL can return to above market growth (share losses started in mid2021) and we see valuation as unattractive at 14x 2024 EV/EBITDA.”

Shares of PRPL fell 2.37% On Friday following the company’s announcement, but are still up more than 20% on year-to-date basis. The Seeking Alpha Quant Rating on PRPL flipped to Strong Buy just ahead of the recent rally.