Stitch Fix, Inc. (SFIX) PT Lowered to $15 at BMO Capital as Guidance Becomes Conservative Around Brexit and Coronavirus

BMO Capital analyst Simeon Siegel lowered the price target on Stitch Fix, Inc. (NASDAQ: SFIX) to $15.00 (from $25.00) while maintaining a Market Perform rating after the company reported top line growth of +22% YoY, and management revised FY20 growth down to +15-17% YoY vs. the prior guidance of +20.5-22.5%. Additionally, active client growth remained stagnant in the mid-teens and annual revenue per active client slowed sequentially.

The analyst stated "Management flagged reasons for the slowing revenue growth but we worry the deceleration plays into investor fears". "Management highlighted concerns around a more promotional environment in the quarter (depth and length of promotions by competitors) and macro factors including the coronavirus and Brexit (as it relates to their U.K. business) as the driving factors of the downward revision. 3Q guidance of +15% YoY implies around +5% YoY growth in 4Q (on a 52wk adjusted basis, the growth is expected to be in the +DD range). With many investor questions surrounding the long-term scale of the model, the guidance cut will likely put pressure on SFIX to prove otherwise".

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