MKM Partners Bullish On Revolve Group: What Investors Need To Know

Online fashion retailer Revolve Group Inc RVLV has unique core competencies that position it to gain market share in a post-COVID-19 environment, and sales catalysts supporting 20%+ growth, according to MKM Partners.

The Revolve Group Analyst: Roxanne Meyer initiated coverage of Revolve Group with a Buy rating and $24 price target.

The Revolve Group Takeaways: The company faces near-term headwinds that are "largely priced into expectations," with upside potential "stemming from its ability to pivot and a bounce back in dresses over the coming quarters," Meyer said in the Wednesday initiation note.

Revolve Group continues to be profitable in a challenging environment, which underlines the strength of its operating model, signaling the company's market share growth capabilities as unprofitable retailers exit, the analyst said. 

"We see several growth drivers to support ongoing 20%+ sales growth including new categories such as beauty and active, FORWARD, International growth, and a loyalty program that has the potential to be needle-moving." 

Owned Brands is a key differentiator and a catalyst for sales and gross margin expansion in 2021, she said. 

The $24 price target is based on 2x the 2021 sales estimate, and Revolve Group is the least expensive among e-commerce platforms on an EV/sales growth basis, according to MKM Partners. 

RVLV Price Action: Shares of Revolve Group were trading down 2.83% at $17.48 at last check Thursday.