BofA Securities Analyst Remains Bullish on Crocs Stock
Christopher Nardone, an analyst at BofA Securities, has reiterated his Buy rating on Crocs, Inc. (CROX), setting a price objective of $179. This optimistic outlook is based on Nardone’s belief that Crocs offers an attractive risk/reward proposition, particularly with its stock trading at a 10x price-to-earnings (P/E) ratio.
Strong Earnings Forecast Despite Challenges
Nardone expects Crocs to report strong third-quarter earnings, projecting earnings per share (EPS) of $3.17. This projection surpasses the company’s own guidance range of $2.95 to $3.10 and is 2% higher than consensus estimates. The analyst attributes this positive outlook to strong international sales growth, which he anticipates will drive a 5.8% increase in overall Crocs sales. While Heydude sales are expected to decline by 15% as per guidance, this decline is in line with expectations.
Focus on North America Sales and DTC Transition
Nardone highlights that the key focus for investors this quarter will be on trends in the North American market. The analyst is particularly interested in observing the impact of Crocs’ shift to direct-to-consumer (DTC) sales following the company’s transition away from Amazon in September. A confirmation of stable or modestly higher North American sales would alleviate concerns regarding what Nardone considers the main debate surrounding Crocs stock.
Historical Trends Suggest Positive Outlook
Nardone points to a historical pattern where Crocs has adjusted its sales outlook upwards (three times) and its margins (twice) in January compared to initial fourth-quarter guidance. Based on this historical trend, the analyst forecasts another conservative outlook for the fourth quarter, projecting EPS of $2.66. This would push the fiscal 2024 EPS estimate to $12.86, aligning with the high end of the guidance range.
Stock Performance and Investment Opportunities
CROX stock has seen significant growth in the past year, gaining over 62%. Investors seeking exposure to Crocs can consider the Advisors Series Trust VegTech Plant-based Innovation & Climate ETF (EATV) and the Advisor Managed Portfolios Miller Value Partners Appreciation ETF (MVPA).
As of Friday’s last check, CROX shares were trading up by 1.72% at $138.43.