By Senad Karaahmetovic
A Barclays (LON: BARC ) analyst sees Poshmark 's (NASDAQ: POSH ) “critical mass” of active buyers continuing to grow, hence he upgraded shares to Overweight from Equal Weight. He also raised the price target to $17 from $13.
While he still sees several negatives for POSH, including the continued exposure to IDFA headwinds and rising marketing costs that pressure EBITDA back into the negative territory, he also sees positive signs.
“The CAC/buyer flywheel is critical for these asset-light marketplaces, but with a critical mass of active buyers that’s still growing, high engagement from the social/gamification aspects of the platform, secular tailwinds to secondhand, and opportunity to outperform as consumers trade-down in a softer macro,” he said in an upgrade note.
The analyst is also positive on valuation as POSH trades near the low end of the group. Critically, he sees potential for multiples to “firm up, particularly once we have a path back to positive EBITDA territory.”
On the other hand, he downgraded Revolve (NYSE: RVLV ) to Underweight from Equal Weight with a price target of $20 (down from the prior $30). However, he admits this was a “difficult” call to make.
“RVLV has incredibly strong execution, above average AOV, grows faster than peers (off a lower base), is consistently profitable and has a very strong management bench to boot. That said, even at a premium to peers, its tough to justify the stock trading at a 100% premium on FY23 revs (1.5x vs. 0.7x) and more than a full turn higher on GP (2.9x vs. 1.6x), even if it is one of the few peers still generating positive EBITDA,” the analyst explained.
RVLV shares are down over 4% in premarket Monday while POSH stock price is up nearly 6%.
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