Skechers A Top Opportunity, Says Citi
While there have been concerns surrounding the athletic apparel and footwear trend, Skechers USA Inc (NYSE: SKX) has more than a 20 percent growth opportunity over the next two years, Citi’s Scott T Chronert said in a report. He maintained a Buy rating on the company, while adding the stock to the SMID Value Creators Focus List.
Although the athletic apparel and footwear trend seems to be “in the later innings,” Skechers’ global growth prospects remain intact, analyst Chronert commented. The company is likely to deliver a positive earnings inflection in H2, following a y/y decline in comps in Q2.
Overcoming Challenges In The US
The “unprecedented consolidation” in sporting goods retailing had resulted in promotional pressure, Chronert mentioned. He added, however, that US trends seemed to be improving sequentially for Skechers, with its shipments tracking higher so far this quarter and “no meaningful order cancellations or reductions thus far in back-to-school season.”
Although there is risk related to Skechers’ Q3 results being impacted by “some lingering promotional activity,” this is already reflected in the company’s current valuation and trading patterns, the analyst noted.
“We have increased confidence in Skechers’ international momentum, its strong balance sheet and clean inventories,” Chronert wrote. Since the company faces easier comps in H2, the recent pressure on shares “could prove to be an attractive entry point.”
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Latest Ratings for SKX
|Dec 2016||Wells Fargo||Initiates Coverage On||Outperform|
|Nov 2016||B. Riley||Downgrades||Buy||Neutral|
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