Telsey raises ThredUp stock target to $7, maintains Outperform

On Tuesday, Telsey Advisory Group increased its price target on ThredUp Inc. (NASDAQ:TDUP) shares to $7.00, up from the previous target of $6.00, while keeping an Outperform rating on the stock. The stock, currently trading at $4.44, has shown remarkable momentum with a 405% surge over the past six months and is approaching its 52-week high of $4.62. The adjustment comes after ThredUp reported strong financial performance in the first quarter of FY25, surpassing expectations with record quarterly revenue. According to InvestingPro data, the company maintains impressive gross margins of nearly 80%. This revenue boost was supported by a mid-single digit growth in active buyers, including a remarkable 95% rise in new buyers, and a mid-teen percentage increase in orders.

ThredUp’s impressive start to the fiscal year was further highlighted by its April performance, which marked the company’s most successful month for customer acquisition. While the company is not yet profitable, with a loss per share of $0.36 over the last twelve months, the firm’s financial success translated into a robust adjusted EBITDA, exceeding forecasts due to improved gross margins and well-managed operating expenses. InvestingPro subscribers have access to 12 additional key insights about ThredUp’s financial health and market position. ThredUp has also issued a promising second-quarter guidance that slightly exceeds market expectations for both revenue and EBITDA.

The company’s positive trajectory has prompted it to revise its annual outlook upward, now anticipating results that surpass prior market expectations. ThredUp’s strategic focus on a domestic-only business model has minimized disruptions from tariff-related retail issues and has allowed it to concentrate on enhancing the customer experience for both buyers and sellers.

Analysts at Telsey believe that ThredUp is well-positioned to benefit from the rapidly growing resale market over the long term. The company’s proprietary platform and supply chain capabilities offer a seamless shopping experience in a still fragmented marketplace. With a current market capitalization of $523 million and trading at a Price/Book ratio of 9.29x, the raised price target to $7 is based on a 2.3x multiple on the firm’s two-year forward sales estimate of $315 million, compared to the five-year average next twelve months (NTM) multiple of 1.9x and the digital/e-commerce sector’s five-year group average NTM multiple of 2.7x. Get comprehensive valuation analysis and detailed financial metrics with a InvestingPro subscription.

In other recent news, ThredUp Inc. reported its first-quarter 2025 earnings, showcasing a stronger-than-expected performance. The company achieved an earnings per share (EPS) of -$0.04, surpassing analyst expectations of -$0.08. ThredUp’s revenue also exceeded forecasts, reaching $71.3 million compared to the anticipated $65.62 million, marking a 10.5% year-over-year increase. This robust performance was attributed to strategic investments in AI-driven product innovations and significant growth in new buyer acquisition, which rose by 95% year-over-year. The company’s gross margin stood at 79.1%, with an adjusted EBITDA of $3.8 million, representing 5.3% of revenue. ThredUp also reported a record quarterly free cash flow of $3.9 million and ended the quarter with a cash position of $55.4 million. Looking ahead, ThredUp projects second-quarter revenue between $72.5 million and $74.5 million, with full-year 2025 revenue guidance set at $281 million to $291 million. Analysts from firms like Wells Fargo (NYSE:WFC) and Telsey Group expressed positive sentiments regarding ThredUp’s strategic initiatives and market position, reflecting confidence in the company’s ability to maintain growth momentum.

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