Typically, when a company delivers an estimates-beating quarter, its stock price rises as eager investors pile in to capitalize on the success. That hasn't been the case with fashion retailer Revolve Group (RVLV 2.00%), whose shares are down by nearly 21% week to date according to S&P Global Market Intelligence, despite the seemingly encouraging first quarter it reported on Tuesday.
In the quarter, Revolve's fundamentals showed a vast improvement in key line items like net sales (up nearly 60% year over year to more than $283 million) and free cash flow, which rose by 62% to almost $53 million. And while net income was essentially flat on a comparative basis, it remained well in the black at nearly $22.6 million. Those top- and bottom-line numbers, by the way, topped the average analyst estimates.
But several prognosticators following the retailer weren't overly impressed by this performance, and cut their price targets.
One was BMO Capital's Simeon Siegel, who feels the retailer is now worth $35 per share, notably below his previous $47 estimation. Siegel pointed to a "strong-but-decelerating" April for Revolve as a source of concern, but did express admiration for its big revenue pop. He's keeping his market perform (neutral) recommendation on the stock.
It's notable that among those price target cuts -- 10, by my count -- no analyst downgraded his or her recommendation on Revolve's shares. Of the 10, seven are keeping their buy tags on the stock, with the remainder maintaining neutral recommendations. This indicates that many financial professionals continue to see good potential in the still-growing company's business.