Stitch Fix (SFIX 3.92%) is ending the week on a high note thanks to a bullish analyst review. The online personal styling service's shares rose as much as 15.4% on Friday before backing down to a 12.9% gain as of 2:15 p.m., EST.
Analyst firm KeyBanc raised its price target on Stitch Fix from $65 to $95 per share early Friday morning. KeyBanc analyst Edward Yruma also reiterated his overweight rating on the stock, which means that he recommends accumulating Stitch Fix shares because they should beat the broader market over the next year or so. In Yruma's view, Stitch Fix shares are attractively priced at 3.9 times forward sales and 8.6 times trailing gross profit.
The price target boost was part of a larger analysis of the e-commerce sector, which started turning the retail world upside down during the COVID-19 lockdowns of 2020. Stitch Fix was held up as a particularly promising stock in this exploding market segment because it offers "digital experiences that are material improvements over traditional competitors."
The stock is setting all-time highs on a daily basis at the moment and has delivered a 257% return over the last 52 weeks. Stitch Fix's skyrocketing stock has its fair share of detractors, and 37% of the share count is currently sold short.
Personally, I would prefer to see the soaring valuation supported by more impressive revenue growth; sales rose just 10% year over year in December's first-quarter report . I will gladly watch Stitch Fix from the sidelines until either the stock cools down or the sales growth heats up.