Crocs Could Pull Off 10-15% Earnings Upside, Baird Says In Upgrade

Crocs, Inc. CROX shares were soaring Friday after Baird turned bullish on the casual footwear company's stock.  

The Analyst

Jonathan Komp upgraded Crocs from Neutral to Outperform and maintained a $29 price target.

The Thesis

The recent pullback in Crocs shares has been overdone given signs of brand momentum, Komp said in the Friday upgrade note. (See his track record here.) 

For the past 12-18 months, the analyst said he has held a positive view of the company’s structural improvements — but has been hesitant to chase shares after the stock broke seven-year highs entering 2019.

Crocs has already delivered "impressive" financial improvements and has the potential for brand momentum into 2020, Komp said. 

The analyst projected the stock will outperform as the company successfully cycles tougher comparisons and reinforces confidence in sustained sales and margin gains.

Baird is optimistic about Crocs' pipeline of clogs and sandals heading into 2020 and said the company has a steady lineup of additional collaborations with an increasing international mix.

“Net, we have high confidence in current 2019-2020E estimates and see 10-15% upside to 2020E earnings as possible/realistic if top-line momentum continues." 

Price Action

Crocs shares were trading higher by 10.2% at $19.70 at the time of publication Friday. 

Related Links:

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Photo by Pink Sherbet Photography via Wikimedia.