Piper Jaffray Downgrades Stitch Fix, Inc. (SFIX) to Neutral

(Updated - September 20, 2018 6:16 AM EDT)

Piper Jaffray analyst Erinn Murphy downgraded Stitch Fix, Inc. (NASDAQ: SFIX) from Overweight to Neutral with a price target of $43.00 (from $29.00).

The analyst steps aside as management has minimal room for error when it comes to execution given the tough Q4 comp setup. Murphy notes that given the high valuation there is little wiggle room for future execution, managing competitive threats, handling a macro/consumer spending slowdown, controlling rising customer acquisition costs and moderating full-price sell through as customers and vendors mix expands.

The analyst further comments "While we expect FY18 revenue growth to accelerate modestly over FY17 in absolute terms it will still likely be significantly lower than FY16 growth. The NA softlines market has significantly improved over the LTM (tracking up ~$15B Y/Y in CY18 vs. +$7B in CY16) and SFIX has launched many initiatives (categories, Style Pass, Extras, etc.) over that period, but SFIX dollar growth has decelerated from peak. As such, we see potential FY16 marks peak revenue growth. If true, SFIX revenue growth would be <10% by FY25 at the latest."

For an analyst ratings summary and ratings history on Stitch Fix, Inc. click here. For more ratings news on Stitch Fix, Inc. click here.

Shares of Stitch Fix, Inc. closed at $47.11 yesterday.

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