William Blair analyst Dylan Carden has maintained their bullish stance on RVLV stock, giving a Buy rating on February 26.
Dylan Carden has given his Buy rating due to a combination of factors that highlight Revolve Group’s potential for significant growth. The company is making a strategic move to expand its retail presence by hiring a senior leader to oversee this initiative, signaling a shift from its previous cautious approach. This decision reduces execution risks associated with retail expansion, as it involves experienced talent to manage the complexities of store rollouts. Revolve’s ability to attract such talent indicates confidence in capitalizing on the retail opportunity, which could potentially double its business by contributing substantial revenue and store-level EBITDA.
Furthermore, the current valuation of Revolve shares does not fully reflect the growth potential from new categories and international expansion. The company’s shares are valued in line with historical levels, yet the market seems to overlook the impact of retail expansion and margin recovery. Despite the narrative that a retail focus might lower the company’s valuation multiple, the shift from an online to a retail model aligns with the broader industry trend of apparel moving offline. This strategic pivot positions Revolve to leverage its strengths in a changing market landscape, supporting the Buy rating.