On Friday, Jefferies maintained a Buy rating on Rent the Runway Inc (NASDAQ: RENT) but significantly reduced its price target from $53.00 to $21.00. The adjustment follows the company's fourth-quarter sales and EBITDA surpassing consensus expectations. However, the initial guidance for fiscal year 2024 showed sales at the midpoint below expectations, yet EBITDA projections were notably higher.
The report from Jefferies highlighted that Rent the Runway reiterated its goal to achieve breakeven free cash flow (FCF) in fiscal year 2024. This target is primarily supported by cost savings initiatives, which have already been largely secured. The remaining improvements are expected to come from organic growth and further reductions in variable costs.
Management at Rent the Runway expressed confidence, describing fiscal year 2024 as a potential transformative period for the company. This optimism is based on the successful implementation of strategic initiatives. Consequently, the company plans to increase marketing efforts while continuing to enhance the customer experience.
Jefferies' commentary included insights into Rent the Runway's performance and outlook. The analyst noted that the company's management was upbeat about the future, indicating that the strategic measures being taken are yielding positive results. The focus now shifts to ramping up marketing and continuing to refine the customer experience to drive growth.
Despite the reduced price target, the Buy rating suggests that Jefferies remains positive about the company's stock performance potential. The new price target reflects a more conservative valuation while acknowledging the company's progress and future plans for improvement and growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.