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Wunderlich Goes 'Sole Searching' In Footwear

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Analysts at Wunderlich recently released a report updating their take on footwear stocks ahead of Q1 earnings season. Overall, analysts remain bullish on the group, despite recent bumps in the road.

Port Disruptions

The West Coast port conflict ended in mid-February, but analysts point out that the post-strike port congestion will still take a while to clear up before deliveries will be back to normal. Early predictions for normalization called for a late-April to early-May timetable.

However, continuing transportation delays indicate that the aftermath of the port disruption is still negatively impacting deliveries.

U.S. Dollar Strength

The Euro has fallen about 8 percent versus the U.S. dollar since then end of 2014, and analysts predict that dollar strength will continue to weigh on international footwear sales numbers in the foreseeable future.

Related Link: Why Piper Jaffray Is Raising Under Armour's PT To $90

U.S. footwear names with the highest international exposure will continue to be pressured most by forex headwinds, including Crocs Inc (NASDAQ: CROX) (58 percent exposure), Deckers Outdoor Corp (NYSE: DECK) (35 percent exposure), Sketchers USA Inc (NYSE: SKX) (35 percent exposure) and Wolverine World Wide Inc (NYSE: WWW) (28 percent exposure).

Wolverine recently stated that every 5 percent increase in dollar strength reduces annual earnings by $0.04 per share.

Spring Trends

According to the report, this year’s spring trends are toward casual and comfortable.

“While the sneaker and comfort trend remains very strong,” analysts write, “there is a shift in demand from core heritage styles to more fashion-oriented sneakers including thicker platform bottoms, different materials/fabrics, and embellishments.”

Stock Picks

Wunderlich has a Buy rating on the stocks of Brown Shoe Company Inc (NYSE: BWS), Crocs, Deckers, Sketchers, and Steven Madden Ltd (NASDAQ: SHOO). They have Hold ratings on DSW Inc (NYSE: DSW) and Wolverine.

Latest Ratings for CROX

DateFirmActionFromTo
Nov 2016Monness Crespi HardtDowngradesBuyNeutral
Aug 2016SusquehannaInitiates Coverage onNeutral
May 2016Sterne Agee CRTUpgradesNeutralBuy

View More Analyst Ratings for CROX
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Posted-In: apparel stocks shoe stocks WunderlichAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas

 

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