On Wednesday, BofA Securities updated its stance on Crocs , Inc. (NASDAQ:CROX), increasing the footwear company's price target from $140.00 to $150.00. The firm sustained its Buy rating on the stock, indicating a positive outlook on the company's financial performance.
The price target adjustment comes after BofA Securities analysts held meetings with Crocs' CFO Anne Mehlman and SVP of IR/Strategy Erinn Murphy in New York.
The discussions have bolstered the analysts' confidence in Crocs' fundamental outlook, prompting the price target hike to $150, which now reflects a 9.5 times multiple of the company's estimated 2024 enterprise value to EBITDA (earnings before interest, taxes, depreciation, and amortization), up from the previous 9 times multiple.
The analysts believe that Crocs' valuation is attractive at an 8.5 times EV/EBITDA multiple and a 10.4 times P/E (price-to-earnings) ratio. They highlighted several factors that contribute to the optimistic view of the company's stock.
These include the international strength of the Crocs brand, which has been delivering better than expected results, and the anticipated recovery of Heydude (HD) throughout the year, which is expected to alleviate concerns over the stock's valuation.
Furthermore, the BofA Securities team is encouraged by Crocs' financial strategy, which involves a balance between paying down debt and repurchasing shares. The company's focus on reducing its $820 million term loan B while continuing its share buyback program is noted as a positive move, especially given Crocs' strong free cash flow (FCF) margins.
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