Online styling service Stitch Fix Inc (NASDAQ: SFIX) is set to report fourth-quarter earnings Tuesday.
SunTrust analyst Youssef Squali maintains a Buy rating with a $44 price target.
SunTrust expects fourth-quarter results to come in relatively in-line with expectations, Squali said in a Monday note. (See his track record here.)
“If the company comes within shouting distance of Street expectations and management guides to relatively in-line FY20 results, we believe the stock will show much volatility near-term give its record short position (40% of float), and its material underperformance year-to-date,” the analyst said.
Much has been made of the year-over-year weakness in credit card data and traffic trends in the fourth quarter, despite a low historical correlation, he said.
Marketing efficiency and traction in the U.K. and newer products should drive the stock, Squali said.
“We believe there is still too much friction in the Personal Shopper experience (Prime members only, only within mobile app, monthly fee) to have much impact on Stitch Fix, and importantly we have yet to see Amazon market the offering more aggressively. Commentary on this offering and its impact to-date will be of focus on the call, in our view.”
Stitch Fix shares were up 4.96% at $19.25 at the close Monday.
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Photo courtesy of Stitch Fix.
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