Cautious Outlook on Revolve Group Amid Macroeconomic Concerns and Import Exposure

Analyst Lorraine Hutchinson of Bank of America Securities reiterated a Sell rating on Revolve Group, with a price target of $20.00.

Lorraine Hutchinson’s rating is based on several factors that contribute to a cautious outlook for Revolve Group. Despite a strong gross margin performance in the third quarter, which exceeded expectations due to effective tariff mitigation and an insurance recovery, there are persistent concerns about macroeconomic uncertainties and the company’s significant exposure to imports from China. These factors pose ongoing risks that justify maintaining a Sell rating.
Additionally, while Revolve Group has managed to mitigate most of its tariff impacts and has seen some sales growth, the increase in return rates due to price hikes and a shift in product mix has offset margin gains. The company’s sales have been pressured by fewer promotions, and although there is a slight acceleration in sales trends, consumer sentiment remains fragile. These challenges, along with a conservative valuation approach, underpin the decision to maintain a cautious stance on the stock.