Special Situation: Stitch Fix

Article Excerpt

STITCH FIX INC., $20 (Nasdaq symbol SFIX; Consumer sector; Shares outstanding: 97.2 million; Market cap: $1.9 billion; Takeover Target Rating: Highest; No dividend paid; TSINetwork Rating: Extra Risk; www.stitchfix.com) is an online wardrobe stylist that provides its subscribers with regular shipments of clothes, shoes and accessories—all tailored to the customer’s tastes. Stitch Fix went public with an IPO in November 2017 at $15 a share. The shares are now up 53.3%. In its fiscal 2018 second quarter, ended January 27, 2018, the company’s revenue jumped 24.4%, to $295.9 million from $237.8 million a year earlier. That’s mainly due to new clients, or “clothing partners.” They number 2.5 million, up 30.6% from a year earlier. Earnings before unusual items fell to $0.07 a share from $0.42. However, that beat the consensus estimate of $0.06. The stock may continue to gain considering the interest investors now have in artificial intelligence stocks. By using its own ever-increasing amounts of data on customer preferences, Stitch Fix aims to forecast…