Why Stitch Fix, Inc. Stock Popped Thursday

MarketsMotley Fool

What happened

Shares of Stitch Fix (NASDAQ: SFIX), a personalized online apparel business, moved higher on Thursday. The stock rose as much as 10.7%, but ended the trading day up 9.9%.

Continue Reading Below

The stock's rise follows bullish commentary, as well as a price target increase, from KeyBanc Capital Markets analyst Edward Yruma.

So what

"We are increasingly confident in management's ability to grow market share at a healthy margin, especially among [Stitch Fix's] newer categories," said Yruma in a note to investors this week (via Barron's ). Yruma raised his price target on the stock from $33 to $53. Shares are currently trading at $48.84.

To support his higher price target, Yruma raised his outlook for the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) through 2020. By 2020, Yruma forecasts Sitch Fix can achieve EBITDA close to $95 million. Yruma also cited a healthy consumer environment as a catalyst.

Shares are up about 90% year to date.

Now what

Stitch Fix's stock has soared recently, rising 45% in June on the heels of the company's better-than-expected fiscal third-quarter results. Strong momentum during the quarter, including a 30% year-over-year increase in active clients and a 29% jump in revenue, prompted management to raise its outlook for its full-year results.

Management expects revenue for the full year to rise 25% to 26% compared to fiscal 2017.

The company reports its results for its fiscal fourth quarter on Oct. 1.

Find out why Stitch Fix is one of the 10 best stocks to buy now

Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. (In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the market!*)

Tom and David just revealed their ten top stock picks for investors to buy right now. Stitch Fix is on the list -- but there are nine others you may be overlooking.

Click here to get access to the full list!

*Stock Advisor returns as of August 6, 2018

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stitch Fix. The Motley Fool has a disclosure policy.