Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Stitch Fix, Inc.
The analyst notes that the company delivered an EBITDA beat in the third quarter, driven by sales coming in at the top of the guided range and operating expense leverage.
SFIX is seeing a revolution of shifting trends from being a specialist in women's tops to gaining pace in underpenetrated categories like work dresses and event dresses.
However, the analyst adds that broader macroeconomic challenges continue to pressure SFIX consumers.
In addition, visibility to ultimate subscriber growth and profitability potential remains challenging as the company continues to refine the platform.
While the fourth quarter revenue guidance is below consensus, the EBITDA outlook aligns with consensus expectations.
The analyst adds that SFIX saw increased headwinds in April (Q4 guidance assumes a continuation of April's trends). The pressure came through in overall volume and customer acquisition, while AOV was relatively steady.
Based on the above, for FY23, the analyst sees EBITDA of $13 million, up from the $4 million estimate previously.
Price Action: SFIX shares are trading higher by 30.9% to $4.81 on the last check Wednesday.
