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RealReal Jumps on Bullish Piper Sandler Initiation

RealReal is initiated with a buy rating and $19 price target at Piper Sandler.
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Online fashion retailer RealReal  (REAL) - Get RealReal, Inc. Report jumped nearly 10% on heavy volume Tuesday after analysts at Piper Sandler initiated coverage of the stock with an overweight rating. 

The San Francisco-based consignment luxury goods seller was also given a $19 price target by Piper Sandler. 

Shares were rising 9.33% to $16.76 on Tuesday.

"We are optimistic that closet clean-outs should rebound post vaccine which should support supply & in turn meet demand and see [gross margin value] accelerating starting in 2Q21," said a note from Piper Sandler's Erinn Murphy.

Murphy noted that RealReal shares have fallen nearly 20% in 2020, making its current level a "compelling entry point against long-term secular tailwinds." 

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Still, RealReal appears to be a few years from profitability, according to Tuesday's note from Murphy, but the company also has adopted new moves to help stem losses during the pandemic, including virtual appointments and smaller-format stores.

In October, the company's shares got a boost after it said it would launch an online shop that will feature Gucci items.

"Gucci is one of RealReal’s most-in-demand luxury brands year after year," RealReal said in a statement at the time.

"Gucci continues to see strong growth in resale demand (up another 19% this year), and is the most in-demand men’s brand for the third year in a row."

The subsidiary of the Paris luxury-goods group Kering PPRUF "also commands strong resale value for consignors, with clothing resale value 2.3 times stronger than average compared to all brands sold on" RealReal, the company said.