Skechers Shares Have Potential For 20% Upside From Here - Skechers USA (NYSE:SKX)

Skechers USA IncSKX

's mixed

earnings report on Thursday and greater than 2-percent decline in the stock isn't reason enough for Buckingham Research Group's Scott Krasik to part ways with his bullish outlook. The analyst maintains a Buy rating on

Skechers' stock

with an unchanged $34 price target as there were several notable data points, which reinforce a strong outlook.

Skechers' second quarter was highlighted by strong domestic and

international growth

but was offset by a higher than expected investment in the retail channel and international expansion, the analyst continued. In fact, investors are underappreciated the brand's global potential based on a double-digit backlog along with expectations for "hyper rates" of growth in China, Korea, other parts of Asia and Latin America for at least the next two years.

Unloved Stock Has Catalysts Ahead

Meanwhile, Skechers is still in the early stages of a new product cycle, which has historically been a catalyst for the stock along with multiple expansions.

Moreover, the stock is undervalued when compared to its near-, medium- and long-term growth prospects while also trading at a "meaningful" discount to other consumer companies. As such, the stock is now set up favorably amid a lower bar, especially a margin inflection that has been pushed until the first quarter of 2018.

Finally, by the end of fiscal 2017, Skechers will hold $5.54 per share of net cash, which represents 20 percent of its current market cap, Krasik concluded. This just adds another layer of optionality that can benefit shareholders in the future.

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Earnings Scheduled For July 21, 2017

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