Baird initiated coverage of Reformation Inc. with an outperform rating and a $19 price target, representing 31% upside from the retailer’s last closing price of $14.48.
The analyst cited Reformation’s revenue growth to approximately $500 million alongside sustained profitability and a gross margin of 62% over the past 12 months. The firm’s business model, characterized by full-price sales and low customer acquisition costs, was highlighted as a competitive advantage in the sustainable fashion segment.
Baird’s valuation framework applies an 11.2 times multiple to its adjusted EBITDA estimate of $110 million for the next 12 months plus one year, underpinning the $19 price target. Reformation currently trades at 9.7 times its 2027 EBITDA projection, according to the note.
The company plans to expand its retail footprint from 64 stores at the end of 2025 to 106 by the end of 2028, targeting mid-to-high teens revenue growth and a recovery in adjusted EBITDA margins toward the mid-teens range. Expansion is expected to include under-explored product categories and a limited wholesale channel to enter new markets.
Reformation’s initial public offering in 2023 drew strong demand, with shares heavily oversubscribed despite pricing at the lower end of the range. Permira, the company’s backer, allocated shares primarily to long-term and sector-focused investors, with the top 20 investors receiving about 90% of the offering.
