Crocs (NASDAQ: CROX) shares gained around 3% on Wednesday after Loop Capital upgraded the stock to a “Buy” from “Hold,” citing an attractive valuation and growth prospects for its Hey Dude brand.
The firm set a price target implying nearly 12% upside potential for the stock.
Loop Capital analyst Laura Champine highlighted the company’s potential for direct-to-consumer (DTC) growth in 2024, saying that management sounded confident about expansion at a recent investor conference.
“We think valuation is attractive, and the company sounded on plan at our conference this week,” Champine wrote on Wednesday.
“Management expects DTC to grow this year at Hey Dude, and we think our expectation for 1% growth in the channel may prove conservative. Hey Dude laps easy comparisons, and DTC may show upside growth in Q1 as the brand laps -11% YoY,” she said.
HEYDUDE pulls back production in China on tariffs by US
Crocs stock has seen volatility over the past week, gaining more than 5% in the wake of President Donald Trump’s announcement of an additional 10% tariff on Chinese goods.
The company has been shifting production away from China in response to previous tariff measures.
“The additional 10% tariff that has been announced recently on Chinese-made goods is not in CROX’s previous outlook,” Champine noted.
That said, Hey Dude is pulling back production in China to 27% of the total, which is a massive shift as it adjusts to the volatile tariff environment.
Despite concerns about cost pressures, Loop Capital believes that market uncertainty surrounding tariffs has created a buying opportunity for investors.
Stifel reaffirms bullish outlook on CROX
On Monday, Stifel analysts reaffirmed their Buy rating on Crocs shares and maintained a price target of $138.
Following discussions with Erinn Murphy, Senior Vice President of Investor Relations & Strategy at Crocs, Stifel expressed confidence in the company’s future performance.
Their analysis pointed to Crocs’ strong margin profile, which includes a 58.76% gross margin and a 20.09% return on assets.
The analysts pointed out that at 6.5 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) based on calendar year 2025 estimates, the market may not be fully recognizing the international growth prospects and could be underestimating the contribution from the HEYDUDE brand
BoFA expresses optimises in Crocs’ North American sales in 2025
BofA Securities analyst Christopher Nardone also reiterated a Buy rating on Crocs last month, setting a price target of $153.
He expressed optimism that Crocs’ North American sales could see modest growth in 2025, supported by a strong wholesale order book for the next six months and upcoming product innovations.
New product launches, such as the InMotion clog priced at $60, expanded sandal offerings, and a greater focus on slippers in the second half of the year, are expected to drive consumer interest.
Additionally, continued growth in Jibbitz accessories and brand collaborations are likely to contribute to sales momentum.
While Crocs may see a decline in first-quarter sales due to calendar shifts and tough comparisons with the previous year’s strong growth, analysts anticipate a rebound in the second quarter.
International markets are expected to be the key driver of overall brand growth in 2025 and beyond.
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