Market Overview

William Blair Remains Bullish On Stitch Fix After Q2 Earnings Beat, Client Growth

William Blair Remains Bullish On Stitch Fix After Q2 Earnings Beat, Client Growth
Related SFIX
48 Biggest Movers From Yesterday
Mid-Afternoon Market Update: Ascena Retail Climbs On Upbeat Q1 Results; Destination Maternity Shares Drop
Stitch Fix: Love Balanced Growth (Seeking Alpha)

Stitch Fix Inc (NASDAQ: SFIX), an online subscription shopping service, reported second-quarter results that reinforce the bullish case for owning the stock, according to William Blair.

The Analyst

William Blair's Ralph Schackart maintains an Outperform rating on Stitch Fix's stock.

The Thesis

Stitch Fix's top-and-bottom line beat in its earnings report wasn't the only notable highlight from the quarter, Schackart said in a Tuesday note. (See the analyst's track record here.)

Schackart's other takeaways from the online retailer's quarterly report include:

  • Active clients grew 31 percent year-over-year and accelerated from the prior quarter.
  • The sequential net additions of active clients of 112,000 exceeded an estimate of 50,000.
  • EBITDA upside in the quarter came from a better-than-expected shift in operating expenses from the second quarter, and likely explains why 2018 EBITDA guidance didn't move at the midpoint.

Stitch Fix's stock did sell off immediately after the earnings report, but is still higher by more than 50 percent since its November 2017 initial public offering, the analyst said.

The sell-off could be attributed to concerns over the 190-basis point compression in gross margin levels, along with expectations for a move higher in EBITDA guidance at the midpoint. Nevertheless, the stock is trading at a 1.5x multiple on fiscal 2019 revenue estimate, which is a discount versus a 2.3x multiple for a group of comparable companies.

Price Action

Shares of Stitch Fix were up by 0.12 percent at $24.09 at the time of publication Tuesday morning. 

Related Links:

From IPO To CEO, Here Are 6 Things To Know About Stitch Fix

The Pros And Cons Of Stitch Fix, According To Barclays

Photo courtesy of Stitch Fix. 

Latest Ratings for SFIX

Dec 2018William BlairDowngradesOutperformMarket Perform
Dec 2018Stifel NicolausMaintainsHoldHold
Dec 2018KeyBancMaintainsOverweightOverweight

View More Analyst Ratings for SFIX
View the Latest Analyst Ratings

Posted-In: Apparel fashion Ralph Schackart William BlairAnalyst Color Reiteration Analyst Ratings Best of Benzinga


Related Articles (SFIX)

View Comments and Join the Discussion!

Latest Ratings

MOSJP MorganDowngrades33.0
BACKeefe Bruyette & WoodsDowngrades29.0
AMTMorgan StanleyDowngrades170.0
EBAYMorgan StanleyDowngrades33.0
UNITMorgan StanleyDowngrades16.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

How You Can Make A Difference (And Money) With Impact Investing

CPI Report Relatively Tame; Markets Lose Steam Early On After Tillerson News