Morgan Stanley initiated coverage of Reformation Inc. with an Equalweight (neutral) rating and a price target of $16.00, reflecting a cautious outlook despite acknowledging the company’s e-commerce-led growth model, agile supply chain, and premium brand positioning.
The bank’s initiation follows recent declines in Reformation’s shares, which traded at $14.48 on Friday, down 9.5% over the prior week and approaching the 52-week low of $14.29. The stock was priced at $15.00 in its initial public offering, with shares primarily allocated to institutional investors, according to Bloomberg.
Reformation’s revenue reached approximately $500 million, supported by gross profit margins of roughly 62%, as highlighted by InvestingPro. Morgan Stanley projected mid-term growth in the "middle of the teens" range and EBITDA margins between the "middle and high teens," though it adopted a conservative stance on short-term sales execution and fashion trend risks.
The initiation comes as Reformation joins a growing list of apparel retailers pursuing public listings, with RBC Capital and Baird also initiating coverage this week. RBC assigned an Outperform rating with a $18.00 price target, while Baird set a $19.00 target and estimated adjusted EBITDA of $110 million for the coming period.
