Market Overview

The Pros And Cons Of Stitch Fix, According To Barclays

The Pros And Cons Of Stitch Fix, According To Barclays

Stitch Fix Inc (NASDAQ: SFIX), an online personalized styling service company, saw its shares close a hair above the IPO price of $15 on its Nov. 17 Nasdaq debut. The stock has since settled higher in the $23 range. 

The Analyst

Barclays' Ross Sandler initiated coverage of Stitch Fix with an Equal Weight rating and $26 price target.

The Thesis

Despite intense competition in the apparel e-commerce space, Stitch Fix managed to achieve critical mass along and "sizable" market cap with a defensible business model, Sandler said in the initiation note. (See Sandler's track record here.) 

But Stitch Fix still has several concerning factors that prevent a bullish stance at this time, he said. 

The analyst listed the following four reasons to like the stock:

The company operates within a large and underpenetrated $400 billion apparel retail space.

Stitch Fix is a curated service that leverages big data.

The company has a disciplined management team.

Expectations for increased market share come from expanding price points, new categories and an expansion beyond five items per fix.

Some of Stitch Fix's risks are, according to Sandler:

The Women's category has seen a sharp deceleration in growth from 113 percent in fiscal 2016 to 27 percent in fiscal 2017.

A subpar marketing efficiency with a focus on longer payback mediums like TV.

The possibility that the total addressable market will shift to only high-income, fashion-focused women.

The price could create a low retention rate.

Finally, the analyst's $26 price target is based on 1.7x calendar 2019 revenue ,which is a premium to its closest peers — a premium Sandler said is justified given its "history of cash flow generation and its unique business model."

Price Action

Shares of Stitch Fix closed down 1.83 percent at $23.54 Tuesday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For December 12, 2017

30 Stocks Moving In Tuesday's Mid-Day Session

Latest Ratings for SFIX

Nov 2019MaintainsMarket Perform
Oct 2019Initiates Coverage OnOutperform
Oct 2019Initiates Coverage OnOutperform

View More Analyst Ratings for SFIX
View the Latest Analyst Ratings

Posted-In: Apparel Barclays ecommerce fashionAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


Related Articles (SFIX)

View Comments and Join the Discussion!

Latest Ratings

TOLGoldman SachsInitiates Coverage On42.0
KBHGoldman SachsInitiates Coverage On36.0
YEXTSunTrust Robinson HumphreyMaintains28.0
LHCGSunTrust Robinson HumphreyMaintains160.0
DLRSunTrust Robinson HumphreyMaintains140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Credit Suisse Unleashes Wave Of New Energy Coverage

Truckin': All The Tesla Semi Preorders So Far