Stitch Fix Jumps on Earnings Beat and Price Target Upgrades

Stitch Fix surges after posting a narrower-than-expected quarterly loss and issuing a strong outlook that prompts a raft of analyst price-target upgrades.
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Stitch Fix  (SFIX) - Get Report shares surged on Tuesday after the personal styling company posted third-quarter results that beat expectations and gave an outlook that was seen as strong, prompting a raft of analyst price-target upgrades.

Stitch Fix shares were up 12.43% at $65.14 after the San Francisco-based company posted a narrower-than-expected fiscal third-quarter loss as active users topped 4 million. Revenue rose 44% to $535.6 million.

Analysts were quick to lift their price targets amid what they see as positive momentum with “new and reactivated clients around product improvements,” according to Truist Securities, which lifted its price target to $77 from $60 and reiterated its buy rating.

Barclays lifted its price target to $59 from $48 and held its equal weight rating on strong recovery and momentum in the apparel market, which it sees as driving “robust” reactivation rates, even as the apparel e-commerce company’s valuation drifts to the high end.

KeyBanc Capital also praised the results though took a different tact on valuation than Barclays, saying the company’s valuation “… offers one of the most attractive risk profiles in KeyBanc’s coverage universe.” Keybanc has a $75 price target and an overweight rating.

The results show the strength of Stitch Fix’s business model, Telsey Advisory Group said, adding that the company is “… well-positioned to take market share.” Telsey has an $84 price target and an outperform rating on the shares.

Wells Fargo was the least impressed, noting that while the narrower-than-expected loss “was a vast improvement” the company’s sales growth and revenue per client were “not impressive given online apparel dynamics have been much stronger” than what Stitch Fix is seeing.

Wells Fargo still lifted its one-year price target to $35 from $27, though held its underweight rating.