Crocs Shows Strong Fundamental Outlook And International Potential, Says Analyst

BofA Securities analyst Christopher Nardone reiterated a Buy rating on the shares of Crocs Inc CROX and raised the price target from $140 to $150.

The analyst remains encouraged by the upside potential from Crocs’ international strength, which drives better than expected results for the brand, Heydude’s recovery throughout the year, and continued balance of debt paydown and buybacks.

The analyst notes international growth outstripping domestic growth is appreciated by investors, but continued international momentum driven by Asia could drive upside to full-year results.

The analyst views China as the most significant opportunity for Crocs and sees India as a very attractive market over the long run.

Given the continued choppiness in U.S. wholesale, while management has guided HD wholesale sales down in F24, there may be risk that the sell in/sell out convergence may take longer to occur, noted the analyst.

Margin opportunities outside of the Heydude recovery include improved distribution cost efficiencies coinciding with the new distribution center roll out in Las Vegas, opined the analyst.

According to the analyst, Heydude recovering throughout the year should help relieve multiple overhang. Also, Valuation remains compelling at 8.5x EV/EBITDA, said the analyst.

Price Action: CROX shares are trading higher by 2.50% at $135.00 on the last check Wednesday.

Photo via Wikimedia Commons