Warpaint London PLC (AIM:W7L) has received an ‘outperform’ share rating from RBC Capital Markets due to the growth potential in the company's affordable cosmetics business model.
Analysts set a 685p price target to kick off coverage of the London-listed group, whose value proposition presents investors with “style without the splurge”.
As RBC pointed out, Warpaint uses lower cost packaging and leverages in-store displays to support brand marketing.
This has contributed to superior margins compared to its competitors.
“Warpaint presents a strong value proposition to customers by leveraging its dupe strategy to drive sales across its own-brand cosmetics lines, W7 and Technic,” RBC analysts added.
This ‘dupe’ approach has gained traction among consumers, particularly as household budgets tighten, they said.
Additionally, Warpaint’s 20% compound annual growth rate to 2023 has outpaced the broader mass colour cosmetics market.
Shares are currently trading at 530p, having added 39% year to date.