Piper Sandler has maintained a positive stance on Crocs , Inc. (NASDAQ: NASDAQ:CROX), reiterating an Overweight rating and a $170.00 price target.
The firm's analysis suggests that despite the stock's recent rally alongside the market, it remains 12% below its summer peak, contrasting with a 5% increase in the broader group.
The third-quarter guidance from Crocs was deemed conservative by the firm, noting a strong performance in August, likely boosted by back-to-school shopping, but acknowledged a more volatile September with deeper direct-to-consumer promotions and a deceleration indicated by credit card data.
The analyst observed that this pattern mirrors the previous year's industry softening during the transitional period. Even with recent negative checks in the China market, where Crocs represents only 4% of total sales in 2023, the firm believes that the brand still has growth potential in the region. The valuation of Crocs is also highlighted as inexpensive, trading at 10 times the projected earnings for 2025.
The report further emphasized that an in-line sales result for the third quarter of 2024, coupled with an earnings per share (EPS) beat, would be favorable for the stock. The outlook is based on the second quarter performance, where sales met expectations and EPS exceeded them by 12%.
Despite some cautious remarks from competitors and a challenging market in China, Piper Sandler appears confident in Crocs' momentum.
The assessment of industry conditions in China noted more negative sentiment, as evidenced by cautious comments from Skechers (not covered by Piper Sandler) and the fact that Topsports does not sell Crocs products. Nonetheless, the firm suggests that the impact on Crocs may be mitigated by the brand's relatively small exposure to the Chinese market and its ongoing momentum.
In other recent news, Crocs has achieved a historic second quarter with revenues surpassing $1.1 billion, the highest in the company's history.
The company's adjusted earnings per share (EPS) rose by 12% to $4.01, marking a record free cash flow.
BofA Securities maintained a Buy rating on Crocs, emphasizing the company's consistent performance and attractive valuation. Piper Sandler also resumed coverage of the company with an Overweight rating, highlighting the brand's performance.
Williams Capital upgraded Crocs stock from Hold to Buy, following the announcement that actress and producer, Sidney Sweeney, has become the new face of HEYDUDE, a Crocs brand. Despite a revenue decrease for the HEYDUDE brand, Crocs brand revenues grew by 11%. Analysts at BofA Securities projected a positive influence on Crocs' total sales growth by 150 basis points for the year due to the transition with Amazon (NASDAQ:AMZN).
InvestingPro Insights
According to the latest data from InvestingPro, Crocs, Inc. (NASDAQ:CROX) presents an interesting financial profile for investors considering the company's stock. The company's market capitalization stands at $8.61 billion, underscoring its significant presence in the footwear industry. A key metric that stands out is the P/E ratio, which at 10.83, suggests that the stock is trading at a relatively low price compared to its near-term earnings growth. This aligns with Piper Sandler's view of the stock being inexpensive.
InvestingPro Tips indicate that Crocs has experienced high returns over the last year, with a year-to-date price total return of an impressive 55.05%, and an even more remarkable one-year price total return of 67.8%. This performance highlights the stock's strong momentum, which Piper Sandler also noted in their analysis. Moreover, the company's liquid assets exceed its short-term obligations, which could provide investors with confidence in the company's ability to manage its finances in the near term.
For those interested in further insights, InvestingPro offers additional tips that delve deeper into Crocs' financial health and market potential. These include observations on the company's moderate level of debt and the fact that analysts predict the company will remain profitable this year.
By incorporating these InvestingPro Insights, investors can gain a more nuanced understanding of Crocs' financial standing and market performance, complementing the analysis provided by Piper Sandler and potentially informing investment decisions. For a more comprehensive analysis, additional tips are available on InvestingPro's platform.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.