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The Ratings Game: Stitch Fix shares tank after sales miss, but analysts remain bullish

Shares of fashion subscription site Stitch Fix Inc. tumbled 35% in Tuesday trading, as investors responded to a small revenue miss in fiscal fourth-quarter earnings and weaker-than-expected active client numbers.

It was not the first time the stock was punished for earnings that analysts generally viewed positively. In its first quarter reporting as a public company last December, the stock fell 10% despite modest earnings beats. The stock fell 4% after a March report that fell short of estimates. Its June report went better, however, as an earnings beat sparked a late-day rally of more than 14%.

Stifel analysts said the small revenue miss—$318.3 million versus a consensus of $318.9 million—probably disappointed buy-side expectations that were hoping for more of a blowout, a “beat and raise” story, rather than a “meet and reiterate.

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