On Wednesday, Loop Capital adjusted its stance on Crocs , Inc. (NASDAQ:CROX), a renowned footwear company, by reducing the price target to $150 from the previous $155. Despite this change, the firm continues to endorse a Buy rating for the company's stock.
The adjustment follows a recent pullback in the stock's value, which Loop Capital sees as an opportunity given what they consider an attractive valuation. The analyst from Loop Capital expressed some reservations about the company's fourth-quarter sales outlook for both of its segments, highlighting challenges that are not fully mitigated by the potential of the Hey Dude brand.
Hey Dude, a subsidiary of Crocs, has been under scrutiny due to its performance, even as it faces comparisons to its past results. The brand's new president, Terence Reilly, is recognized for his marketing expertise from his previous roles at Stanley and Crocs. However, the analyst noted that Reilly's six-month tenure has not yet provided a quick solution for Hey Dude's ongoing issues.
The price target of $150 is based on a discounted Net Operating Profit After Tax (NOPAT) model, which Loop Capital uses to value the company. The slight decrease in the target reflects concerns over the immediate future performance of Crocs and its subsidiary, despite the long-term positive rating.
In summary, Loop Capital is maintaining a positive outlook on Crocs with a Buy rating but has tempered expectations by lowering the price target. The firm's analysis suggests that while the stock is currently undervalued, there are significant challenges ahead, particularly for the Hey Dude brand, which will require strategic marketing efforts to overcome.
In other recent news, Crocs Inc. has experienced a series of adjustments by financial firms following its third-quarter performance. Baird cut its price target for Crocs to $180 from $190 while maintaining an Outperform rating. The firm noted concerns about a more challenging spending environment and a prolonged recovery for the HEYDUDE brand, a subsidiary of Crocs. Despite these concerns, Baird sees value in Crocs shares after a recent pullback.
Stifel also adjusted its price target for Crocs from $158.00 to $138.00 but maintained a Buy rating. This revision followed Crocs' third-quarter performance, which saw a $16 million increase in revenue and a $0.52 rise in adjusted earnings per share (EPS). Stifel noted slower-than-expected progress in revitalizing the HEYDUDE brand, but remains optimistic about its potential.
Barclays lowered its price target for Crocs to $125 from $164, while still maintaining an Overweight rating. The firm pointed to the challenging macroeconomic environment and slower-than-expected integration of HEYDUDE as factors influencing this adjustment. Williams Trading adjusted its price target for Crocs from $163.00 to $140.00, maintaining a Buy rating on the company's stock.
In terms of earnings and revenue, Crocs reported a stronger-than-expected third-quarter performance with revenues of $1.06 billion, a 2% year-over-year increase, surpassing the consensus estimate of $1.05 billion. Adjusted earnings per share (EPS) was $3.60, exceeding the consensus of $3.10.
In a strategic move, Crocs partnered with BARK to launch a pet-friendly footwear line, Pet Crocs, tapping into the growing pet accessory market. This new product line offers matching footwear for dogs and their owners.
InvestingPro Insights
Recent InvestingPro data provides additional context to Loop Capital's analysis of Crocs, Inc. (NASDAQ:CROX). The company's P/E ratio stands at 10.01, with an adjusted P/E ratio of 7.77 for the last twelve months as of Q2 2024, indicating that the stock may indeed be undervalued as suggested by Loop Capital. This is further supported by a PEG ratio of 0.34, which suggests the stock could be undervalued relative to its growth prospects.
InvestingPro Tips highlight that Crocs is "trading at a low P/E ratio relative to near-term earnings growth" and is "trading at a low earnings multiple," aligning with Loop Capital's view on the stock's attractive valuation. Additionally, the company's revenue growth of 4.35% over the last twelve months and a strong EBITDA growth of 9.04% demonstrate ongoing financial health, despite the challenges mentioned in the article.
It's worth noting that InvestingPro offers 13 additional tips for Crocs, providing a more comprehensive analysis for investors looking to delve deeper into the company's prospects.
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