TD Cowen downgrades Brilliant Earth on ‘lofty’ margin estimates

TD Cowen downgraded Brilliant Earth to Market Perform from Outperform with a price target of $3.40, down from $3.50. The analyst likes the company’s digital first, asset-light and “Gen Z relevant” model, but views its gross margins as elevated and believes store growth and marketing costs could pressure EBITDA margins. Street expectations for 7% fiscal 2024 EBITDA margins “appear lofty,” says the firm, which awaits clearer catalysts for a path to Brilliant Earth’s 15%-20% EBITDA margin algorithm.