Market Overview

Favorable Setup, Attractive Valuation Keeps Cowen Bullish On Skechers

Share:
Favorable Setup, Attractive Valuation Keeps Cowen Bullish On Skechers
Related SKX
Mid-Afternoon Market Update: Skechers Jumps On Earnings Beat; Del Taco Shares Slide
Under Armour Gets A Boost From Skechers Q3 Beat
Dow Gaps Up Again To Record High; JPMorgan, Goldman Lead (Investor's Business Daily)

John Kernan of Cowen believes shares of Skechers USA Inc (NYSE: SKX) are "too cheap" and should be bought following the company's first-quarter results.

Kernan noted that Skechers' first-quarter sales growth of 9.6 percent came in ahead of consensus estimate of 8.5 percent, partly due to an 11.6 percent growth in international wholesale. Of particular note, global same-store sales grew 2.9 percent while international same-store sales grew 8.2 percent which outpaced the domestic same-store sales growth of 1.5 percent.

The strong report prompted the analyst to maintain an Outperform rating on Skechers' stock with an unchanged $35 price target.

Kernan previously estimated Skechers' international wholesale revenue would account for a higher percentage of the company's total sales. This is what happened in the first quarter when international wholesale revenue accounted for 46 percent of total sales, up from 43 percent in the same quarter a year ago.

So Now What?

Looking forward, the analyst expects a similar growth rate in international wholesale sales after a 40 percent growth in China and India and as much as 85 percent in other countries. The company also sees a mid-20 percent growth rate in Korea and Latin America.

Kernan also highlighted that the continued shift to international wholesale sales will result in a margin expansion and international gross, operating and net margins are higher versus the domestic business.

Also, the analyst believes that management's second-quarter guidance, which calls for an 8–11 percent sales growth could prove to be a conservative estimate given strong global backlogs, a favorable Easter holiday shift and the new product line launch called YOU by Skechers.

At last check, shares of Skechers were down 2.29 percent at $25.55.

Related Links:

Why Skechers Has 15 Percent Upside Before Earnings

Nike Continues To Build A Moat Around Its Brand

Latest Ratings for SKX

DateFirmActionFromTo
Oct 2017BuckinghamMaintainsBuy
Oct 2017Wells FargoMaintainsMarket Perform
Oct 2017Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for SKX
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Guidance Analyst Ratings Movers Trading Ideas Best of Benzinga

 

Related Articles (SKX)

View Comments and Join the Discussion!
Loading...

Partner Center

Loading...