Why 3 Stitch Fix Analysts Remain Cautious After F1Q Print: 'A Challenging Turnaround Amidst A Tough Macro Environment'

Although Stitch Fix Inc SFIX reported upbeat adjusted EBITDA for the fiscal first quarter, its stock came under pressure due to a sales miss.

Truist Securities On Stitch Fix

Analyst Youssef Squali maintained a Hold rating while reducing the price target from $6 to $5.

Per Squali's note, the company reported mixed results for the quarter and issued mixed guidance for the fiscal second quarter and the full year, “reflecting a challenging turnaround amidst a tough macro environment.”

“While mgmt is making good progress rightsizing opex to accelerate profitability (to next quarter, F2Q23, by our estimate) and inventory needed to support the platform, while investing in key priorities to re-ignite growth in its core Fix biz over time, a lower active client count is likely to pressure revenue growth throughout FY23,” he added.

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KeyBanc Capital Markets On Stitch Fix

Analyst Noah Zatzkin reiterated a Sector Weight rating on the stock.

Stitch Fix’s earnings reflect the impact of “ongoing cost-savings efforts,” Zatzkin said. “SFIX noted that an earlier/more promotional environment negatively impacted net active clients (-11% y/y), and 2Q23 guidance points to continued softness in top-line trends (-21% to -19% y/y),” he added.

“While we are encouraged by efforts to return to adjusted EBITDA profitability and achieve positive FCF (targeting in the NT), we remain Sector Weight given the challenging macro backdrop and heightened promotional environment,” the analyst concluded.

Telsey Advisory Group On Stitch Fix

Finally, analyst Dana Telsey reaffirmed a Market Perform rating, while reducing the price target from $6 to $5.

“While SFIX reported better-than-expected adjusted EBITDA for the first time since the fiscal second quarter last year, the underlying fundamentals tell a bit of a different story with sales and expenses both missing expectations and gross margin in-line, though down significantly YoY,” Telsey wrote in a note.

SFIX Price Action

Shares of Stitch Fix are trading mostly flat at $3.67 at the time of publication Wednesday.