Stifel Reiterates on Crocs After Blackstone Investment Announcement

In a report published Monday, Stifel analyst Jim Duffy reiterated a Buy rating on Crocs, Inc.

and $17.00 price target following a $200M investment from Blackstone and CEO and President John McCarvel's retirement. According to the report, the partnership included Blackstone's investment in $200mn convertible preferred stock (converts at $14.50 per share, 6% dividend rate, issuance proceeds applied to share repurchases), an enhanced share repurchase authorization (to $350mn) and Blackstone's assumption of two existing board seats. The search for a new CEO is also underway. “While we view terms of the partnership as favorable to Blackstone, we expect their positive influence on the direction of the company (board influence with two seats, influence on recruitment of a new CEO, strategic guidance, etc.) and influence on long-run margin potential more than outweighs the earnings dilution,” the report said. “This dilution could be tempered by use of cash on hand for additional share repurchases (we estimate $200mn plus after repatriation taxes).” CROX closed Friday at $13.33.