What Happened?
Shares of online fashion retailer Revolve (NASDAQ: RVLV) jumped 3.3% in the morning session after Raymond James raised its price target on the stock and maintained an Outperform rating, citing a more favorable tariff environment.
The investment firm boosted its price target on the online fashion retailer to $25 from $21, noting that potential gross margin pressure from tariffs is now expected to be "modestly less" than previously anticipated. Analysts at the firm now assume China tariffs will be 30%, a significant reduction from prior estimates that were as high as 145%. This change reduces the estimated annualized headwind from tariffs from over 700 basis points to around 400 basis points. The upgrade was made despite the firm noting slower growth and an increase in promotions during the quarter. However, Raymond James still projected Revolve would achieve a 5% year-over-year revenue increase for the second quarter, in line with consensus estimates. The positive analyst action and improved tariff outlook appeared to outweigh broader market caution, lifting shares in a sector that has been closely watching trade policy developments.
After the initial pop the shares cooled down to $21.94, up 3.5% from previous close.
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What Is The Market Telling Us
Revolve’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 28.3% on the news that the company reported strong second quarter earnings. Revolve narrowly beat analysts' revenue expectations this quarter. Its buyers also outperformed Wall Street's estimates. On the other hand, its revenue growth regrettably slowed. Overall, this was a solid quarter for Revolve.
Revolve is down 34.6% since the beginning of the year, and at $21.94 per share, it is trading 43.5% below its 52-week high of $38.80 from November 2024. Investors who bought $1,000 worth of Revolve’s shares 5 years ago would now be looking at an investment worth $1,371.
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