Please ensure Javascript is enabled for purposes of website accessibility

Why Stitch Fix Shares Are Soaring Today

By Anders Bylund - Jan 22, 2021 at 2:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A bullish analyst report drove the online styling specialist higher today.

What happened

Stitch Fix (SFIX 2.66%) 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.

So what

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.

A smiling young woman in a red coat sits on a park bench, using a tablet computer.

Image source: Getty Images.

Now what

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.



Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

StitchFix Stock Quote
StitchFix
SFIX
$6.18 (2.66%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.