On Friday, Williams Trading analyst adjusted the firm's stance on shares of Crocs (NASDAQ:CROX), downgrading the stock rating from Buy to Hold and revising the price target down to $112 from the previous $126. The stock, currently trading at $102.67, has seen a 22.8% decline over the past six months.
According to InvestingPro data, analysts' targets for the stock range from $100 to $180, with the consensus remaining moderately bullish at 1.88 (on a scale where 1 is Strong Buy). The revision comes amid observed weakening trends for the Crocs brand and continued weak performance of the HEYDUDE brand, with no indications of imminent improvement.
Analyst noted that based on proprietary checks, retailers in the U.S. are likely to plan for Crocs' 2025 business without expecting growth, ready to chase product if necessary, while planning for a downturn in the 2025 HEYDUDE business. This cautious planning reflects the diminished outlook for HEYDUDE since Crocs announced its third-quarter results for 2024.
The downgrade also prompted Williams Trading to revise its revenue and EPS estimates for Crocs downward for the fourth quarter of 2024, as well as for the full fiscal years 2024, 2025, and 2026. The adjustments in financial projections mirror the concerns over the brands' future performance.
Despite these concerns, InvestingPro's analysis indicates the stock is currently undervalued, with strong fundamentals including a P/E ratio of 7.39 and an overall Financial Health score rated as "GREAT."
Analyst underscored the importance of Crocs providing investors with a clear vision for the future of both the Crocs and HEYDUDE brands. This clarity is deemed essential, as the brand presidents are responsible for formulating visions and strategies and overseeing the day-to-day operations of the businesses.
The revised price target of $112, down from $126, reflects the analyst's recalibrated expectations for Crocs' stock performance in the wake of the observed trends and market planning. The new valuation is set against a backdrop of strategic challenges and the need for effective brand management to navigate the current market conditions.
With the next earnings report due on February 13, investors seeking deeper insights can access comprehensive analysis and 12 additional ProTips through InvestingPro's detailed research reports.
In other recent news, Crocs Inc. reported a 2% year-over-year increase in its third quarter 2024 earnings, with consolidated revenues reaching $1.1 billion. The company has also expanded its senior revolving credit facility to $1 billion, marking a $250 million increase.
In recent analyst notes, Piper Sandler maintained an Overweight rating on Crocs, while BofA Securities reduced its price target to $144 from $147, retaining a Buy rating. However, Loop Capital downgraded Crocs from Buy to Hold, reducing the price target to $110. These changes in analyst outlooks and financial developments are among the recent news for Crocs Inc.
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