TDUP - Barclays upgrades Poshmark to 'Buy' downgrades Revolve to 'Sell'

Poshmark ( NASDAQ: POSH ) is a strong pick as eCommerce-focused consumers trade down amidst a macroeconomic slowdown, per Barclays analyst Trevor Young.

In a note assuming coverage of the stock, Young noted that secular tailwinds in second hand fashion are bolstered by a consumer trade down as recessionary risks rise. He cited strong growth, growing online penetration and purchase frequency, and lower order values as key to bolstering a recovery for shares from an over 50% decline in the past year.

“Second hand is quickly emerging as an attractive sector given secular tailwinds, ESG considerations, robust secondary demand for limited edition/scarce goods, and the dual benefit of consumers trading up to aspirational brands and trading down in a tougher macro,” he commented on Monday. “Overall, we favor marketplaces in the current environment and in particular like second hand players POSH and [ThredUp] ( TDUP ).”

As such, both stocks were rated “Overweight”, with the former upgraded from the bank’s prior coverage of the stock at a Hold-equivalent. Poshmark ( POSH ) shares rose 4.24% in Monday’s premarket trading.

By contrast, Revolve Group ( NYSE: RVLV ) was downgraded to a Sell-equivalent amid margin concerns.

“Despite historically strong execution, RVLV’s premium valuation to peers should be pressured in the near-term,” Young wrote. “Revenue growth is slowing hard and compares remain tough on an absolute dollar basis. With S&M upticking and GM eroding as full-price mix normalizes from record highs and mix shifts to higher return rate categories, such as dresses, we rate shares [Underweight].”

Alongside the downgrade, Young cut the bank’s target on shares to $17 from a prior $20. Revolve ( RVLV ) shares slipped 3.87% in premarket trading on Monday.

Read more on Poshmark’s recent earnings release .

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