Stitch Fix Shares Jump On Solid Q1 Beat, Transformation Efforts Take Hold: Analyst

Shares of Stitch Fix Inc SFIX spiked in early trading on Wednesday, after the company reporting upbeat fiscal first-quarter results.

Stitch Fix reported a "solid beat," with fiscal first-quarter adjusted EBITDA of $13.5 million, ahead of the consensus of $7.4 million, according to Telsey Advisory Group.

The Stitch Fix Rating: Analyst Dana Telsey maintained a Market Perform rating, while raising the price target from $4 to $6.

The Stitch Fix Thesis: The company achieved a "broad-based outperformance," with sales, gross margins, and expenses coming in better than expected, Telsey said in the note.

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Although active clients declined by 3.0% sequentially, it represented an improvement of 170 basis point (bps) from the 4.7% decline reported in the previous quarter, she added.

"Overall, the first quarter performance is an early sign that transformation efforts are taking hold with improved marketing, higher customer acquisition and engagement, better inventory management, and more newness in the assortment helping drive an enhanced customer experience," the analyst wrote.

Management guided to full year revenue down 12%-15% to between $1.14 billion and $1.18 billion, up from $1.11 billion to $1.16 billion previously, she further stated.

Price Action: Shares of Stitch Fix had risen by 44.22% to $6.63 at the time of publication on Wednesday.

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