Mizuho upgrades Stitch Fix stock rating on limited downside risk

Mizuho upgraded Stitch Fix's stock rating to Neutral from Underperform on Tuesday, reducing its price target to $2.50 from $3.00. The firm cited limited downside risk, despite the company's shares falling more than 50% year-to-date, compared to a 12% gain in the S&P 500. Mizuho noted that the company's cash, short-term investments, and inventories now account for over 90% of its $330 million market capitalization.

The analyst believes there is upside potential, with InvestingPro stating the stock appears undervalued at current levels. The market is assigning minimal value to Stitch Fix's core operating model, which may be a factor in the rating change. Stitch Fix reported its fiscal Q4 2026 earnings, reporting a smaller-than-expected loss and revenue slightly below expectations.

However, the firm maintained its cautious outlook for the new year, citing customer growth concerns and missed Wall Street guidance expectations.