Analyst Jay Sole of UBS maintained a Hold rating on Stitch Fix, retaining the price target of $6.00.
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Jay Sole has given his Hold rating due to a combination of factors influencing Stitch Fix’s current financial outlook. The company’s recent quarterly report indicates an improvement in revenue generation, but this growth is accompanied by a reduction in gross margins, primarily due to increased transportation costs and a shift in product mix. While there is potential for the company’s earnings per share estimates to rise if revenue growth continues alongside margin stabilization, there is uncertainty about whether this will occur.
Additionally, the company’s guidance for future revenue is above consensus, yet its EBITDA projections align with market expectations, suggesting limited upside potential. The decline in active clients is showing signs of improvement, but it remains a concern. Given these mixed signals and potential risks, such as a weaker-than-expected holiday season, Jay Sole maintains a neutral stance on the stock, reflected in the Hold rating.
Sole covers the Consumer Cyclical sector, focusing on stocks such as Deckers Outdoor, Macy’s, and Nike. According to TipRanks, Sole has an average return of 6.2% and a 51.73% success rate on recommended stocks.
In another report released on September 25, Mizuho Securities also maintained a Hold rating on the stock with a $6.00 price target.