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Skechers Shares Have Potential For 20% Upside From Here

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Skechers Shares Have Potential For 20% Upside From Here

Skechers USA Inc (NYSE: SKX)'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.

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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

Latest Ratings for SKX

DateFirmActionFromTo
Oct 2020Morgan StanleyMaintainsEqual-Weight
Apr 2020Deutsche BankMaintainsBuy
Apr 2020Morgan StanleyMaintainsEqual-Weight

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View the Latest Analyst Ratings

 

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Posted-In: Scott KrasikAnalyst Color Earnings Long Ideas News Reiteration Analyst Ratings Trading Ideas

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