Why Revolve Group's Stock Got An Upgrade

Revolve Group Inc RVLV has superior profitability and cash flow generation, better than most e-commerce pure-plays. It also has higher customer engagement and earnings growth than traditional retailers, according to BofA Securities.

The Revolve Group Analyst: Lorraine Hutchinson upgrades the rating for Revolve Group from Neutral to Buy, while raising the price target from $42 to $65.

The Revolve Group Thesis: The stock “offers an opportunity to invest in trends that should gain steam in a recovery and remain post-pandemic,” Hutchinson said in the upgrade note.

There is an accelerated shift to online shopping, while customers are increasingly “favoring small brands with unique aesthetics and taking cues from influencers instead of traditional advertising,” she added.

The custom-built proprietary technology platform gives it a data-driven approach, which allows Revolve Group to “make lean initial buys and react quickly to trends, thus reducing fashion and inventory risk,” the analyst noted.

“As the weather becomes warmer and consumers anticipate reopening, we expect pent-up demand for going out products to rise. The return of travel and parties should also benefit interest in REVOLVE’s products,” she further wrote.

RVLV Price Action: Shares of Revolve Group had risen by 3.39% to $54.36 at the time of publication Thursday.

(Photo by Andrew Neel on Unsplash)