RBC Incrementally Positive on Stitch Fix (SFIX) Following Survey; PT Trimmed to $43

RBC Capital analyst Mark Mahaney lowered the price target on Stitch Fix, Inc. (NASDAQ: SFIX) to $43.00 (from $52.00) while maintaining an Outperform rating, but is incrementally positive after their 2nd survey of 2,000+ consumers including ~150 Stitch Fix customers.

Survey Takeaways:

1) The Internet is clearly growing as a channel for apparel purchases (82% penetration vs. 73% in December 2017).

2) AMZN clearly leads the Online apparel market (76% chose Amazon, dramatically more than any other site).

3) There appears to be growing interest in Online clothing subscription services (28% currently use or have used a service vs. 14% in 2017) and the two services within this category that are most frequently used are Amazon Wardrobe (45%) and Stich Fix (35%).

4) Brand awareness of SFIX has risen strongly (45% from 35% in 2017).

5) Satisfaction scores of SFIX are intrinsically high, have remained consistent over the past two years, and are consistent with the results of other leading consumer franchises like Amazon, Netflix & Spotify.

6) Keep rates are rising (2.6 items per Fix vs. 2.2 in 2017). &

7) Kids adoption could ramp in the near-term as 86% of SFIX customers who are parents said they’d use the service for their children.

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