12:21 PM EDT, 09/25/2024 (MT Newswires) -- Stitch Fix ( SFIX ) reported late Tuesday that its fiscal Q4 net loss widened and revenue dropped year-over-year, which likely served as a "negative catalyst" to market sentiment, UBS said in a note Tuesday.

Analysts said the company's management expects the company to return to positive revenue growth by the end of fiscal year 2026. However, the market anticipated this growth to happen sooner, which may lead to declining sentiment. On a positive note, net revenue per active client grew by 4.5% year-over-year, an increase from 1.7% growth in fiscal Q3. This trend could help prevent sentiment from declining further, they added.

The subscription-based apparel retailer's fiscal Q1 guidance indicates that US consumer spending on apparel deteriorated in August and September, which could be viewed as a "mild negative surprise to the market." However, the market might view Stitch Fix's ( SFIX ) challenges as company-specific, so it may not heavily affect the broader industry, the analysts said.

"If FreeStyle begins to deliver, the upside to the shares could be material. Conversely, if the customers continue to churn out despite the company's various initiatives to improve the customer experience and etc, the downside could be material," the analysts said.

UBS has a neutral rating and a $3.80 price target on Stitch Fix ( SFIX ). Shares of the company were down nearly 37% in recent trading activity.

Price: 2.38, Change: -1.37, Percent Change: -36.53