Bernstein raises Stitch Fix stock price target to $6 on revenue growth

Bernstein raised its price target for Stitch Fix (SFIX) to $6.00, maintaining a Market Perform rating, following the company's second consecutive quarter of revenue growth after over three years of declines. This growth was fueled by double-digit increases in Average Order Value and Revenue Per Active Client, alongside a recent Q4 earnings beat on both EPS and revenue. The analyst also increased its fiscal year 2026 growth rate projection to 4%, signaling a potential turnaround and improved outlook for the previously struggling retailer.

Analysis

Stitch Fix (SFIX) is exhibiting tangible signs of a business turnaround, prompting a price target increase from Bernstein to $6.00, though the firm maintains a Market Perform rating. This decision follows the company's second consecutive quarter of revenue growth, which reverses a trend of declines spanning more than three years. The recovery is underpinned by improving unit economics, specifically double-digit percentage growth in Average Order Value (AOV) and Revenue Per Active Client (RPAC), coupled with a decelerating rate of decline in its active client base. The positive operational momentum is further validated by a strong fourth-quarter earnings report, where SFIX surpassed consensus expectations with a 30% positive surprise on EPS (-$0.07 vs. -$0.10) and a 2.14% beat on revenue ($311.2 million vs. $304.69 million). Looking ahead, company guidance projects a return to positive revenue growth for fiscal year 2026 (1-5%), with a critical inflection point expected in Q3 for net active client additions. Bernstein's independent forecast of 4% growth for FY26 aligns with this outlook, signaling growing confidence in the sustainability of the recovery despite the stock's significant 148% appreciation over the past year.

Key Decisions for Investors

• Given the stock's 148% run-up over the past year, investors should note Bernstein's Market Perform rating, which suggests that much of the initial recovery may already be priced in, warranting caution on new long positions.
• Monitor the company's next earnings report for the guided third-quarter inflection to positive net active client additions, as this is a critical catalyst for validating the long-term recovery thesis.
• Investors should focus on the durability of the growth in Revenue Per Active Client (RPAC) and Average Order Value (AOV), as continued strength in these key metrics is essential to achieving the fiscal 2026 growth targets and proving the turnaround is sustainable.