Stitch Fix, Inc. (SFIX) shares fell more than 10% during Wednesday's session after the company reported its fourth quarter financial results and guidance for the coming year. Revenue rose 35.8% to $432.15 million, meeting consensus estimates, and non-GAAP net income rose to $0.07 per share, beating consensus estimates by three cents per share.
Despite the strong quarter, weak first quarter and full-year guidance sent shares sharply lower. The company expects top-line revenue to grow at a 20%-plus clip, but EBITDA guidance came in well below analyst expectations. The full-year EBITDA guidance of $10 million to $30 million was just half of what analysts were expecting to see for the year.
Analysts lowered their price targets in response to the profitability concerns but largely kept their overall ratings on the stock. For example, Wells Fargo lowered its price target from $30 to $20 per share but maintained its Market Perform rating on Stitch Fix stock. Other analysts believe that many of these concerns are already priced into the stock.
From a technical standpoint, the stock broke down from trendline support to fresh 52-week lows following the earnings report. The relative strength index (RSI) fell to 39.77, but the moving average convergence divergence (MACD) could see a near-term bearish crossover. These indicators suggest that the stock has room for more downside before any consolidation.
Traders should watch for some consolidation below trendline resistance and above S2 support at $15.22 over the coming session. If the stock breaks out from resistance, traders could see a move higher toward the 50-day moving average and R1 resistance at around $21.50. If the stock breaks down, traders could see a move to retest its all-time lows of around $14.00 that were set following its initial public offering in late 2017.
The author holds no position in the stock(s) mentioned except through passively managed index funds.