Raymond James Upgrades RealReal Ahead Of Q4 Print

RealReal Inc REAL is scheduled to report fourth-quarter results after the closing bell on Feb 25. Street estimates for the quarter appear conservative, given the company’s continued revenue strength and margin expansion, according to Raymond James.

The Analyst

Raymond James’ Aaron Kessler upgraded RealReal from Market Perform to Outperform while establishing a price target of $21.

The Thesis

RealReal’s near-term fundamental trends seem positive and the company could report fourth-quarter revenue at $94 million, representing 51% year-on-year growth and beating the Street’s expectation of $91 million, Kessler said in the note.

He expects RealReal to post gross merchandise volume of $301 million, up 38% year-on-yea, and net merchandise volume of $217 million, translating to 41% growth.

The analyst cited SimilarWeb traffic data, which indicates a 74% increase in total web visits in December. He added that there could be upside to the fourth-quarter estimate for total buyers, which is at 540,000.

A recent consumer survey by Raymond James showed that RealReal’s brand awareness has almost doubled, which “should continue to drive solid customer/revenue growth as well as more efficient marketing spend,” Kessler wrote.

The analyst also said that the resale market’s trend of shifting online bodes well for RealReal, as it is the leader in the luxury segment.