Stitch Fix, Inc. (NASDAQ:SFIX) Just Reported, And Analysts Assigned A US$3.42 Price Target
One of the biggest stories of last week was how Stitch Fix, Inc. (NASDAQ:SFIX) shares plunged 23% in the week since its latest quarterly results, closing yesterday at US$2.59. Revenues were in line with expectations, at US$330m, while statutory losses ballooned to US$0.30 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Stitch Fix
Taking into account the latest results, the twelve analysts covering Stitch Fix provided consensus estimates of US$1.31b revenue in 2024, which would reflect a considerable 12% decline over the past 12 months. Losses are forecast to narrow 9.6% to US$0.93 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.35b and losses of US$0.79 per share in 2024. While this year's revenue estimates dropped there was also a noticeable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 14% to US$3.42, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Stitch Fix at US$4.00 per share, while the most bearish prices it at US$2.25. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 22% by the end of 2024. This indicates a significant reduction from annual growth of 2.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Stitch Fix is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Stitch Fix's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Stitch Fix. Long-term earnings power is much more important than next year's profits. We have forecasts for Stitch Fix going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Stitch Fix , and understanding them should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
