Shares of Revolve Group Inc RVLV have undergone a nearly 19% decline over the past month.
The Revolve Group Analyst Upgrade
The company is projected to experience an expansion in gross margin, attributed to more controlled inventory and anticipated stabilization or minor improvements in return rates, as per Piper Sandler.
Edward Yruma upgraded the rating for Revolve Group from Neutral to Overweight, while raising the price target from $16 to $21.
Weakness in the company’s performance in 2023 can predominantly be ascribed to the external environment, Yruma said in the upgrade note.
Revolve’s active customer count “remained positive despite a difficult spending environment,” the analyst stated. “Given the high fashion content in the apparel and the somewhat narrow target age range, we think that 2024 should see a replacement cycle,” he added.
“We think that RVLV can improve GM at least 100-200 bps over the next two years, which should drive an incremental ~22% lift in EPS,” Yruma further wrote.
“A strong balance sheet gives Revolve significant capital and strategic flexibility,” the analyst said.
RVLV Price Action
Shares of Revolve Group had risen by 0.35% to $14.45 at the time of publication Wednesday.
Check out other analyst stock ratings.
Read Next: Nvidia Left Out, But These Chip Stocks Make The Cut As Barclays’ Preferred Picks: ‘There Isn’t A Ton Of Low-Hanging Fruit At These Levels’
Photo: Unsplash