Stitch Fix Shares Rip Higher After Q3 Earnings: What Do Analysts Think?

Stitch Fix Inc SFIX shares were trading 12% higher Tuesday after the company reported a third-quarter earnings beat and raised its full-year guidance.

On Monday afternoon, Stitch Fix reported a third-quarter adjusted EPS loss of 18 cents on revenue of $535.6 million. Both numbers topped consensus analyst estimates of a 27-cent loss and $511 million, respectively. Revenue was up 44% from a year ago.

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Stitch Fix reported its active client count grew 20% in the quarter to 4.1 million. Revenue per active client was down 3% from a year ago to $481.

Looking ahead, the company raised its fiscal 2021 revenue growth guidance from a previous range of between 18% and 20% to a new range of between 20.9% and 21.5%. The new growth guidance topped consensus analyst forecasts of 19.1% revenue growth.

Voices From The Street: KeyBanc analyst Edward Yruma said Stitch Fix’s third quarter is evidence the company’s momentum is accelerating.

“We think SFIX is well positioned to capitalize on favorable apparel secular trends and continue to take share from brick-and-mortar retailers,” Yruma wrote.

Telsey Advisory Group analyst Dana Telsey said the company’s strong active giant growth was a highlight of the quarter.

“With a strong reception to several new features including direct-buy and fix preview driving greater engagement and improved selling metrics, we continue to view SFIX as well positioned to take share in the apparel category, benefiting from the flexibility of its all-digital model,” Telsey wrote.

Morgan Stanley analyst Lauren Schenk said net customer additions were a key highlight for Stitch Fix bulls, but bears will likely focus on profitability.

“Organic profitability continues to disappoint after adjusting headline numbers clouded by adjustments,” Schenk wrote.

Stitch Fix Ratings, Price Targets:

• KeyBanc has an Overweight rating and $75 target.
• Telsey has an Outperform rating and $84 target.
• Morgan Stanley has an Underweight rating and lifted the price target from $25 to $27. 

Photo courtesy of Stitch Fix.