Barclays sees a 45% upside

Poshmark Inc (NASDAQ: POSH) is up more than 15% this morning after a Barclays analyst said the stock will do well in a recessionary environment.

Poshmark should be a $17 stock

On Monday, Trevor Young initiated Poshmark stock at “overweight” and announced a price objective of $17 that represents a close to 45% upside from its previous close. In a note to clients, he said:

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Second hand is quickly emerging as an attractive sector given secular tailwinds, ESG considerations, robust secondary demand for limited edition/scarce goods, and dual benefit of consumers trading up to aspirational brands and trading down in a tougher macro.

The bullish call is particularly interesting since it arrives only days after Poshmark reported a year-over-year increase in its Q2 loss and issued weaker-than-expected guidance for the current financial quarter.

Despite the rally today, Poshmark stock is still down more than 20% for the year.

Poshmark stock is attractive on relative valuation

Young also likes the Nasdaq-listed firm as it’s relatively cheaper than its peers. He agrees the Apple IDFA and higher cost of marketing continue to be a headwind for Poshmark but said:

[Poshmark has] a critical mass of active buyers that’s still growing, high engagement from the social/gamification aspects of the platform, secular tailwinds to secondhand, and opportunity to outperform as consumers trade-down in a softer macro.

The California-based company ended the recent quarter with 8.0 million active buyers; a 14% increase from Q2 of 2021. The Barclays analyst is convinced the multiple on “POSH” will expand once it has better visibility into EBITDA profitability.

Young is also bullish on ThredUp Inc (NASDAQ: TDUP) – another marketplace for secondhand clothes that’s down more than 75% versus the start of 2022.