Analyst Lorraine Hutchinson of Bank of America Securities reiterated a Sell rating on Revolve Group (RVLV – Research Report), reducing the price target to $20.00.
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Lorraine Hutchinson’s rating is based on several factors impacting Revolve Group’s financial outlook. Despite the company’s first-quarter earnings surpassing expectations, management has lowered its full-year guidance due to the anticipated negative effects of tariffs and a decline in consumer spending attributed to macroeconomic uncertainties. The company’s gross margin guidance has been adjusted downward, reflecting the pressure from tariffs and markdowns, with a significant portion of their inventory sourced from China, which poses a continued risk.
Additionally, the company’s direct import exposure to China, accounting for a substantial portion of its owned brand products, is a concern. The tariffs are expected to impact gross margins significantly in the latter half of 2025. Although the company is exploring mitigation strategies such as cost-sharing and diversifying its sourcing, these efforts may not fully offset the tariff impact. Furthermore, the slowing consumer sentiment and increased markdowns have pressured average order values, contributing to a cautious outlook on the company’s future performance.
Hutchinson covers the Consumer Cyclical sector, focusing on stocks such as TJX Companies, Urban Outfitters, and Five Below. According to TipRanks, Hutchinson has an average return of 6.3% and a 54.29% success rate on recommended stocks.