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Skechers A Top Opportunity, Says Citi

Skechers A Top Opportunity, Says Citi
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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.”

Related Link: Jim Cramer Advises His Viewers On Skechers And Starbucks

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.

Overall Strength

“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 2016Monness Crespi HardtUpgradesNeutralBuy
Dec 2016Wells FargoInitiates Coverage OnOutperform
Dec 2016BuckinghamUpgradesNeutralBuy

View More Analyst Ratings for SKX
View the Latest Analyst Ratings

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