Cautious Outlook on Torrid Holdings: Sell Rating Amid Performance Concerns and Strategic Challenges

Morgan Stanley analyst Alexandra Straton maintained a Sell rating on Torrid Holdings (CURV – Research Report) on June 6 and set a price target of $4.00.

Alexandra Straton has given her Sell rating due to a combination of factors influencing Torrid Holdings’ current and future performance. The company’s recent financial results were in line with expectations, but the quality of these results was deemed lower due to concerns about sales and gross margins. Additionally, while the company has made several improvements over the past few years, such as strengthening its balance sheet and optimizing inventory levels, the guidance for the fiscal year has been trimmed, suggesting potential over-optimism about the second half of the year.
Furthermore, the company’s strategy, including accelerated store closures and new sub-brand launches, is seen as a positive direction, yet it still faces significant challenges. The outsized store closures and potential risks to the projected EBITDA for 2025 contribute to the perception of Torrid Holdings as a “show-me” story, where investors need to see more concrete results before gaining confidence. These factors collectively reinforce the decision to maintain an Underweight rating with a price target of $4.

CURV’s price has also changed moderately for the past six months – from $4.160 to $4.930, which is a 18.51% increase.