Piper Jaffay Downgraded Crocs and Reduced PT Based on Near-Term Trend Concerns

In a report published Monday, Piper Jaffray analyst Erinn Murphy downgraded shares of

from Overweight to Neutral and lowered the PT from $18 to $15. Murphy reiterated concerns regarding Croc's near-term trends and have monitored "1) higher promotional cadence in October in domestic retail; 2) key wholesale accounts in Japan (Xebio & Alpen) saw Sept comp-store sales dip into negative territory; and 3) peer footwear brands that have reported Q3 suggest volatile traffic trends during the Sept qtr." With the trend starting to fade, specifically noting headwinds in Japan, the analyst raised concerns over the lack of a "near-term catalyst." Piper Jaffrey noted that Europe's growth is not improving fast enough to offset the September comps loss of 8.6% for Xebio and 1.8% for Alpen. The analyst further commented on US retails caution of brands such as Crocs for Q4 and Q1 as the brand sells stronger in Spring and Summer. Murphy maintained the 2H estimates of $0.16 for Q3 and a LPS of $0.05 (below the street). The analyst modified FY14 EPS from $1.35 to $1.16 based on a 9% sales growth. Crocs closed at $13.68 and is currently trading at -4.02%.