The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
CERRITOS, United States — The end of Revolve Group Inc.'s quiet period was met with a chorus of buy ratings from Wall Street, with only one analyst straying from the pack. And even he praised the fashion e-tailer, but cited worries over valuation for his hold-equivalent rating.
The analysts widely cited Revolve’s financial performance, influencer marketing strategy and opportunities to expand internationally as key differentiators and growth drivers. "Revolve is the future of retail and brand marketing with its digital commerce platform built on a data-driven backbone and an enviable influencer ecosystem," Jefferies analyst Randal Konik wrote.
In all, Bloomberg data showed nine analysts coming forward with ratings on Revolve, with eight buys and one hold. The stock climbed as much as 7.3 percent Tuesday to $35.19 per share, nearly 96 percent above its initial public offering price of $18.
Here’s a round-up of what analysts are saying about Revolve.
ADVERTISEMENT
Jefferies, Randal Konik
“We see Revolve’s growth and market share gains in the first inning.”
Stock has upside to $60 or higher, based on: low market share with large total addressable market; strong margins that are likely to head higher; platform flywheel that drives new and existing customer site traffic; proprietary systems drive efficiency.
“Proprietary systems and algos help curate assortments, effectively target new and existing customers, and predict trends."
Rates buy, has a Street-high price target of $60
Cowen, Oliver Chen
“Revolve is well-positioned to grow its active user base as it captures fashion-focused Millennial and Gen-Z shoppers through its on-trend assortment, its influencer-based marketing model, and its emphasis on experiential events to promote the brand.”
“Revolve’s data-driven foundation and proprietary technology entrench the business versus both digitally native and brick-and-mortar competitors within the fashion retail space.”
ADVERTISEMENT
Sales are growing in the +20 percent range, margins are expanding via “owned brand penetration growth and ongoing operating leverage opportunities,” and EPS growth is expected in the +30 percent range.
Rates outperform, price target $42
Guggenheim, Robert Drbul
“Revolve is well-positioned to drive continued top-line growth of greater than 20%, with increasing profitability, primarily through Active Customer growth and a thriving portfolio of Owned Brands.”
Revolve has “some of the most attractive growth opportunities across our coverage.” Growth drivers include:
Rates buy, price target $50
William Blair, Ralph Schackart
A “differentiated fashion e-tailer positioned for sustained growth.”
ADVERTISEMENT
“Revolve has several upside opportunities to augment its business model and increase its share of the global online apparel, accessories, and beauty market.” These include:
Rates outperform (firm does not assign price targets).
Raymond James, Aaron Kessler
Positive investment thesis based on:
Rates outperform, price target $40.
Barclays, Ross Sandler
Rates equal-weight, price target $32.
“The only thing that gives us temporary pause is the 50 percent + premium to the fashion e-commerce peers with similar growth and margin profiles.”
“The company’s profitable-since-inception and methodical-growth approach is a welcome contrast to what we typically see from e-commerce.”
By Janet Freund; editors: Catherine Larkin and Will Daley.
In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.
For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.
A blockbuster public listing should clear the way for other brands to try their luck. That, plus LVMH results and what else to watch for in the coming week.
L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.