Stitch Fix Inc SFIX shares were surging one day after reporting a surprise third-quarter earnings beat. Here's what two analysts had to say after the print.
KeyBanc Capital Markets
Stitch Fix’s results were impressive on an absolute basis, but were even more impressive since the first quarter of the calendar year was one of the worst in apparel retail since 2009, analyst Edward Yruma said in a Wednesday note.
“We believe that SFIX’s data-focused approach continues to gain momentum,” the analyst said.
“Stitch Fix cited two reasons for the revenue per active client growth, both of which leverage SFIX’s proprietary algorithms. First, Stitch Fix is getting better at attractive higher-quality clients. Second, SFIX’s use of data allows it to drive highly personalized assortments.”
KeyBanc remains confident in 20-25-percent annual revenue growth for the company, Yruma said.
KeyBanc maintained an Overweight rating on the company with a $40 price target.
Wells Fargo
Stitch Fix illustrated why its model is clearly differentiated in a difficult retail environment, bucking the trend with a second consecutive impressive quarter, analyst Ike Boruchow said in a Wednesday note.
“The 3Q result was highlighted by a strong top-line beat, along with a very optimistic outlook on the rest of the year,” the analyst said.
“The impressive top-line trajectory is largely driven by ongoing strength in its core women’s category — with predicative algorithms helping Stitch Fix reach clients who are better fits for their service, and who they are able to retain for long periods of time.”
Boruchow did say that while the revenue outlook remains bullish, profitability remains a question mark.
Wells Fargo maintained a Market Perform rating with a $30 price target.
Price Action
Stitch Fix shares were trading higher by 14.76 percent at $27.05 at the time of publication Thursday.
Related Links:
Why Stitch Fix Uses Artificial Intelligence To Understand Consumer Habits
The Future Of Retail? Innovative Alternatives To Traditional Shopping
Photo courtesy of Stitch FIx.
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