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Can Stitch Fix Continue Its Surge After Soaring More Than 50% Tuesday?

Stitch Fix is ripping higher after a surprise profit. Let's look at the charts to see how much upside could be left.

Stitch Fix  (SFIX) - Get Stitch Fix, Inc. Class A Report stock is erupting on Tuesday, currently up 43% after reporting better-than-expected earnings.

At the session high, Stitch Fix stock was up more than 53% as investors rapidly bid the stock up.

It helped that the company turned in a solid quarter. Revenue grew 10% year over year to $490.4 million. That came in almost $10 million ahead of expectations.

However, it was Stitch Fix’s surprise profit of 9 cents a share which has investors so excited, as it came in well ahead of analysts’ expectations for a loss of 20 cents.

It also helps that Stitch Fix stock has a short interest of roughly 20%, which only adds fuel to the post-earnings fire.

Let’s look at the stock to see how much - if any - upside could be left after such a violent rally.

Trading Stitch Fix

Daily chart of Stitch Fix stock.

Daily chart of Stitch Fix stock.

The analysts are clearly bullish on Stitch Fix stock after the company’s report. RBC Capital Markets lifted its price target to $64, Goldman Sachs took its target up to $58 and Deutsche Bank raised its price target to $54.

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Even the lowest of those targets is higher than the current price, although it is a bit below Tuesday’s high at $54.94.

Still, the fact that more upside is the lowest of the recently revised targets is a positive sign. So is the fact that StitchFix took out its all-time high with Tuesday’s rally.

That came after the stock rallied through the $52.44 mark, although shares are hovering near this level now. 

What bulls want to see is two-fold. First, they want to see Stitch Fix hold onto the bulk of its post-earnings gains, preferably holding up over the $46.50 to $49 area. In between that range, at $47.86, is the two-times range extension from the 2020 low to the pre-coronavirus 2020 high.

Second, they want to see the stock get above and stay above those prior highs near $52.50.

If it can do that, then Tuesday’s high becomes the first upside target near $55. Above that and the 261.8% extension is in play at $59.28, along with Goldman Sachs’ target at $58.

Above that and the three-times range comes into play at $66.34, followed by RBC's price target at $68.

If Stitch Fix loses the support outlined above, then look to see how it handles its 10-day moving average on a dip.