On Tuesday, Loop Capital maintained a Buy rating on Crocs (NASDAQ:CROX) stock with a price target of $160.00. The firm's stance comes amid a 6% month-to-date decline in the company's stock value, which analysts find to be an attractive valuation point. The recommendation is rooted in a discounted NOPAT (net operating profit after taxes) model.
Despite the stock's recent dip, Loop Capital expresses some concerns, particularly the increased visibility of Crocs and its subsidiary brand Hey Dude in off-price and warehouse club channels.
This trend is not typically seen as positive for brand prestige or pricing power. However, Loop Capital sees mitigating factors, noting that Crocs has improved its online presence, especially on Amazon (NASDAQ:AMZN).
Additionally, the firm points out that off-price items are being sold at prices that are competitive with online sales, which is significant during July, a month known for clearance-driven sales.
The report also highlights the appointment of Terence Reilly as the new president of Hey Dude. Reilly, who has previously shown marketing prowess at Stanley and Crocs, is expected to bring valuable expertise to the brand.
Although Reilly has been in the role for only three months, there is anticipation for favorable comparisons in the fourth quarter and beyond for Hey Dude, under his leadership.
Loop Capital's reiteration of the Buy rating and price target reflects a balance of cautious observation of channel presence and optimism regarding Crocs' online retail improvements and leadership changes within its brands. The firm's analysis suggests that these factors could potentially influence the company's stock performance moving forward.
In other recent news, Crocs Inc. has been a center of attention due to its strong first-quarter financial results and analysts' predictions. The footwear company reported a 7% year-over-year increase in revenue to $939 million, significantly driven by a 16% surge in the Crocs brand revenue. However, the HEYDUDE brand, also owned by Crocs, experienced a 17% revenue drop.
UBS expects Crocs to report a modest second-quarter earnings per share (EPS) beat, based on current sales trends.
Baird has upgraded Crocs' share price target to $190 from $160, maintaining an Outperform rating and expressing confidence in potential for positive surprises in the coming quarters.
InvestingPro Insights
As Crocs (NASDAQ:CROX) navigates through market fluctuations, real-time data from InvestingPro provides a more comprehensive picture of the company's financial health and stock performance. Currently, Crocs boasts a market capitalization of $8.25 billion and an attractive price-to-earnings (P/E) ratio of 10.49, which adjusts slightly lower to 10.01 when looking at the last twelve months as of Q1 2024. This indicates a favorable valuation, particularly when considering the company's near-term earnings growth.
InvestingPro Tips highlight that Crocs has a perfect Piotroski Score of 9, suggesting strong financial health, and analysts have revised their earnings upwards for the upcoming period, reflecting positive sentiment about the company's future performance. Additionally, while the stock has experienced significant price movements, including a 34.87% uptick over the last six months, it is trading at a high Price / Book multiple of 5.16, which investors should consider when evaluating the stock's valuation.
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