Baird initiated coverage of Reformation Inc. on Monday with an Outperform rating and a 12-month price target of $19, implying roughly 31% upside from the apparel retailer’s closing price of $14.48 on Friday.
The brokerage’s valuation is based on 11.2 times its next-twelve-months adjusted EBITDA estimate of $110 million. Reformation’s stock has been trading near its 52-week low of $14.29, reflecting broader softness in consumer discretionary names.
The company generated approximately $500 million in revenue last year while maintaining profitability, with gross margins of 62% over the trailing twelve months. Reformation’s business model emphasizes full-price sales and minimal customer acquisition costs, supporting its premium positioning in the direct-to-consumer apparel segment.
Baird projects mid-to-high single-digit revenue growth alongside a recovery in adjusted EBITDA margins toward mid-double-digit levels. The brokerage also highlighted Reformation’s expansion strategy, which includes opening 42 new stores between the end of 2025 and the end of 2028, increasing its store count from 64 to 106 units.
The expansion will target under-explored product categories and leverage a small wholesale channel to enter new markets. Reformation’s valuation appears attractive relative to peers, trading at 9.7 times its 2027 EBITDA—a discount to many direct-to-consumer competitors but a moderate premium to broader brand groups.
Reformation went public last year with strong demand, as interest exceeded the available shares despite pricing at the lower end of expectations. Shares were predominantly allocated to long-term and sector-focused investors, with the top 20 investors receiving about 90% of the offering.
