Stitch Fix Pops On Several Upgrades Following Results

Stitch Fix (NASDAQ:SFIX) shares looked set for a positive opening Tuesday after several brokerages upgraded their price target for the stock following its strong sales guidance.

For the fiscal year ending at the end of next month, Stitch estimates net revenue between $2.07 billion-$2.08 billion, a growth of 20.9%-21.5% year-on-year.

Adjusted EBITDA is seen in the range of $25 million to $30 million.

The shares were 14% higher in premarket trading with at least eight brokerages upping targets though the range is wide.

Truist Securities’s $77 target was the highest. At $27, Morgan Stanley’s is the lowest and less than half of the stock’s closing price of $57.94 on Monday.

In Q3, the company booked $536 million in net revenue, reflecting 44% year-over-year growth. Active client count grew to more than 4.1 million, reflecting 20% year-over-year growth and the company’s second highest quarter-over-quarter additions ever.

Net loss of $18.83 million was just over half of $34.68 million for the quarter ended May 2, 2020.

Net revenue per active client fell 3% year-on-year to $481.

Wells Fargo noted that while the narrower-than-expected loss was a vast improvement, sales growth and revenue per client number weren’t impressive. Notwithstanding its reservations, Wells Fargo lifted its one-year target for the stock to $35 from $27.