Steven Madden, Ltd. (SHOO) shares fell more than 8% during Thursday's session after Wells Fargo downgraded the stock to Underweight from Equal Weight and lowered its price target from $26.00 to $18.00 per share. Analyst Tom Nikic believes that Steven Madden's brands have underperformed relative to peers like Deckers Outdoor Corporation (DECK) and Skechers U.S.A., Inc. (SKX).
Nikic added that Steve Madden is "highly dependent" on U.S. wholesale channels, and the relative underperformance in sell-throughs this year is likely to result in disappointing sell-in next year. The analyst believes that COVID-19 has adversely affected all "comfort brands" but maintains Overweight ratings on Steven Madden's peers, Deckers and Skechers.
The move follows Loop Capital's downgrade earlier this week from Buy to Hold with a $23.00 price target. Analyst Laura Champine believes that weakness in wholesale channels may remain problematic even after stores reopen, as job losses and health concerns should weaken store traffic. Many retailers have started opening their doors as states have lifted some COVID-19 restrictions, but store traffic is likely to remain light and consumer spending has been depressed by massive increases in unemployment.
From a technical standpoint, the stock moved lower to retest prior lows of nearly $16.00 from mid-March. The relative strength index (RSI) moved toward oversold territory with a reading of 35.95, but the moving average convergence divergence (MACD) experienced a bearish crossover. These indicators suggest that the stock could see some near-term relief, but the intermediate-term trend remains bearish.
Traders should watch for consolidation above trendline support at $16.00 and below reaction lows of $21.00 over the coming sessions. If the stock breaks out from these levels, traders could see a move to retest reaction highs and trendline resistance at around $27.00. If the stock breaks down lower after a period of consolidation, traders could see a move to fresh lows.
The author holds no position in the stock(s) mentioned except through passively managed index funds.