Skechers Stock Looks Ready To Breakout

With a 7% jump on Monday, shares of Skechers (NYSE: SKX) came within a few dollars of breaking out a long-term range. The iconic shoemaker has watched its shares rally more than 140% in the past year as they’ve undone the damage from last year’s pandemic-induced crash, dollar by dollar. Current signs suggest this recovery has room to keeping running yet.

Technically minded investors would do well to keep an eye on them as they approach the double top resistance around the $44 mark, where shares were turned back in 2018 and 2019. Unlike the prior rallies that took shares to that point in the past, this march higher has had a consistent look of strength about it, versus erratic jumps higher.

Fresh Price Target

Only last month UBS were out with a strong bull call on Skechers stock and upped their price target to $52. Even with the fresh highs seen since then, that’s still suggesting upside of some 25% from last night’s closing price. With the technical setup likely to be flagged on every indicator engine on Main Street, you can be sure that there are plenty of eyes watching to see what the shares will do as they close in on $44.

UBS analyst Jay Sole is particularly bullish on the company’s ability to make the most of the ongoing economic reopening. In a note to clients he said "Skechers’ 4Q report was neutral for the stock price as the company's near-term margin commentary weighed on sentiment. However, the current market environment remains very forgiving, in our view. We think the market will very soon revisit this stock and see reset FY21 expectations, a business which will improve sequentially throughout CY21, a relatively inexpensive looking valuation, and decide Skechers is still a good reopening stock."

This Q4 report, from early February, had revenue effectively flat on the year which maybe wasn’t the worst result all things considered. To be fair, this isn’t a tech stock we’re talking about but a fairly stolid consumer name that’s fighting hard to get into the 21st century.

Solid Reputation

Unlike the likes of Nike (NYSE: NKE) who have a bit of flash and dazzle about them, Skechers has stayed away from high profile sports sponsorship deals or partnerships with Apple (NASDAQ: AAPL). Instead they’ve focused on building out a solid position in the market for themselves with the reputation for dependable, comfortable shoes that mightn’t be the most stylish or fashionable but get the job done.

They developed a solid track record of growing revenue and EBITDA year over year through last January, and will be forgiven for not keeping that record going through the COVID pandemic. But with the world’s economies closer to getting back to normal than they’ve been yet, odds are Skechers’ management team will be keen to get back to normal operating procedure too. That means consistent results that should flow through to a well-performing stock price.

If shares can maintain their current momentum and test the double top highs of $44 in the next few sessions, it should get interesting. At worst they’ll retreat before likely consolidating for another attempt, a great entry point to consider, or they’ll smash through and leave it behind them as fresh support. Either way it's worth getting SKX onto your watchlist and keeping an eye on it in the coming weeks.