Footwear company Crocs, once known as a “Covid winner,” has maintained its impressive momentum, resulting in a year-to-date gain of over 32%. As the company prepares to report its first-quarter earnings on Tuesday before the market opens, analysts at Bank of America remain bullish on its prospects. Analyst Christopher Nardone reaffirmed his “buy” rating and $150 price target, suggesting a potential 21.4% upside from its current closing price. Nardone highlights the company’s ability to succeed in a “price-sensitive consumer environment” as a key reason for his positive outlook. He notes that Crocs’ international business, accounting for 40% of total sales, is poised to be the primary driver of growth for the quarter and for the full year, particularly in the Asia-Pacific region, including China and India. He projects an 8% increase in Crocs’ total sales for the first quarter and a 6% increase for the entire year. Furthermore, Nardone anticipates an 11% growth in international sales, potentially driven by the strong performance seen in the segment over the past two years. The analyst also acknowledges the potential for a turnaround in the company’s casual footwear brand, Heydude, which has faced some challenges in recent quarters. He believes that the appointment of Terence Reilly as president of the brand, effective April 29th, can bring about positive changes in the medium term, given Reilly’s successful marketing experience at Crocs and his previous role as president of Stanley drinkware. Nardone emphasizes the market’s anticipation of “signs of improvement in both DTC and margins” for Heydude in the near term. He suggests that a reduction in guidance could be met with disappointment and could undermine credibility, despite the brand’s relatively modest contribution to Crocs’ overall earnings. Nardone also draws attention to the encouraging wholesale results from peer footwear companies Skechers and Steve Madden, which provide further support for Crocs’ upcoming earnings.
Crocs Remains a Strong Investment Ahead of Earnings, Says Bank of America
