Stitch Fix Posts Strong Revenues in Q3, Shares Surge 16%

Stitch Fix (SFIX) shares soared almost 16% in Monday’s extended trading session having closed 4.4% higher on the day after the company reported strong revenues and smaller-than-expected loss in the fiscal third quarter.

Stitch Fix is an online personal styling service in the United States.

Revenue generated in the quarter was $535.6 million, which grew 44% from the year-ago period and outpaced analysts’ expectations of $510.63 million.

The company incurred a loss of $0.18 per share in Q3, compared to the $0.27 loss per share estimated by analysts.

Active clients increased 20% year-over-year, while net revenue per active client decreased 3% from the year-ago quarter.

Stitch Fix’s President and incoming CEO Elizabeth Spaulding said, “We’re pleased with our performance this quarter and are excited to meet the needs and enthusiasm of more and more clients as the world continues to reopen and the apparel retail backdrop improves.” (See Stitch Fix stock analysis on TipRanks)

Spaulding added, “As we look ahead, we are inspired to be building an ecosystem of personalized shopping experiences, designed with universal appeal, to meet every need and occasion.”

For fiscal Q4, the company expects revenues in the range of $540 – $550 million, indicating growth of 21.8% – 24% year-over-year. The consensus estimate is pegged at $534.61 million.

For fiscal 2021, the company expects revenues to come in the range of $2.070 – $2.080 billion, representing an increase of 20.9% – 21.5% year-over-year. The consensus estimate sits at $2.04 billion.

Following the earnings announcement, Stifel Nicolaus analyst Lamont Williams reiterated a Hold rating on the stock but increased his price target to $70 from $55. This implies 20.8% upside potential from the current levels.

Williams commented, “The company is executing well against this backdrop, adding an impressive 234K active clients in the quarter and continuing to develop its newer product initiatives, including direct buy, style preview and newer inventory models.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 3 Buys and 6 Holds. The SFIX average analyst price target of $56.78 implies 2% downside potential from current levels. Shares have increased 16.1% over the past six months.

Stitch Fix scores a 6 of 10 as per the TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.