Piper Sandler initiated coverage of Figma with an Overweight rating and an $85 price target, saying the design software firm is a long-term growth story with a differentiated platform, strong margins and room to expand globally.
Analysts said Figma’s browser-based collaboration model has helped displace older tools from Adobe (NASDAQ:ADBE) and others, and its preliminary annual recurring revenue is approaching $1 billion just 10 years after launch.
Piper sees potential for ARR to triple to more than $3 billion by 2030, helped by new AI-powered features, broader international adoption and plans to convert more free users to paid subscribers.
Figma’s gross margin averaged 92% over the past year, and free cash flow margin around 34%. Piper noted the company is still in early stages of building a full end-to-end digital product platform and could benefit from packaging and pricing changes due in March 2025, which include a 20%–33% price lift on paid seats.
The brokerage warned that the stock could remain volatile in the near term following its recent IPO, shares surged 250% on the first day of trading but have since pulled back and remain well below their peak.
Risks include rising competition, execution issues and margin pressure from AI-related spending, but Piper said the chance to triple sales justifies a premium valuation.
Its $85 target is based on a 68x multiple of forecasted 2030 free cash flow.
source :
