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 25% in the week since its latest quarterly results, closing yesterday at US$2.43. Revenues were in line with expectations, at US$330m, while statutory losses ballooned to US$0.30 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Stitch Fix

Following the recent earnings report, the consensus from twelve analysts covering Stitch Fix is for revenues of US$1.31b in 2024. This implies a considerable 12% decline in revenue compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.94. Before this latest report, the consensus had been expecting revenues of US$1.35b and US$0.79 per share in losses. 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. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Stitch Fix, with the most bullish analyst valuing it at US$4.00 and the most bearish at US$2.25 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Stitch Fix's past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 23% 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 5.1% annually for the foreseeable future. It's pretty clear that Stitch Fix's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Stitch Fix. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Stitch Fix analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Stitch Fix that you need to take into consideration.

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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.