BofA maintains Crocs stock Buy rating, $153 target

On Friday, BofA Securities reaffirmed their Buy rating on Crocs stock (NASDAQ:CROX), maintaining a price target of $153.00. The research firm’s analyst, Chris Nardone, expressed continued confidence in the brand’s ability to achieve sustainable mid-single digit growth. Trading at a P/E ratio of just 6.8x and showing strong profitability metrics according to InvestingPro data, the stock appears undervalued relative to its growth potential. Nardone highlighted the potential for a reevaluation of the company’s stock multiple if Crocs consistently executes its strategy in North America.

Nardone’s analysis pointed to the health of Crocs’ underlying gross margins, which currently stand at an impressive 58.76%, supporting expectations of a 24% operating margin for the current year. This is in spite of anticipated incremental pressures from tariffs and foreign exchange, estimated at a 60 basis point impact. The firm’s stance is bolstered by the company’s proactive financial strategies, including a significant share repurchase program and the repayment of high-cost debt.

During meetings in New York City with Crocs’ CFO Susan Healy, Head of Investor Relations Erinn Murphy, and IR Abigail Ritter, the BofA team gathered insights into the company’s financial health and strategic direction. The discussions confirmed the analyst’s view of Crocs’ strong market position and operational efficiency.

Crocs’ share repurchase authorization stands at $1.3 billion, which represents 21% of the company’s current $6.1 billion market capitalization. This aggressive buyback plan, coupled with the company’s commitment to reducing high-cost debt, underscores its confidence in long-term value creation for shareholders. InvestingPro analysis reveals multiple positive indicators, including strong shareholder yield and efficient capital management.

The reaffirmation of the Buy rating and $153.00 price target comes as Crocs continues to navigate the retail landscape, focusing on brand growth and margin expansion amidst global economic challenges. With a solid financial strategy in place and robust EBITDA of $1.12 billion, Crocs is set to continue its trajectory in the competitive footwear market. For deeper insights into Crocs’ financial health and growth potential, access the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Crocs Inc. reported its fourth-quarter 2024 earnings, which exceeded analysts’ expectations. The company posted an earnings per share (EPS) of $2.52, surpassing the anticipated $2.27, and revenue reached $990 million, above the forecasted $963.96 million. Following the earnings announcement, UBS raised its price target for Crocs to $132, maintaining a Neutral rating, while BofA Securities increased its price target to $153 and reiterated a Buy rating. BofA Securities highlighted Crocs’ attractive risk/reward profile and management’s ability to sustain a high operating margin. The unexpected rise in direct-to-consumer sales for the Hey Dude brand during the fourth quarter was also noted as a positive development. Despite the earnings beat, UBS remains cautious, citing Crocs as a low-growth company with a modest projected five-year EPS growth rate. Crocs’ international markets, particularly in China and Western Europe, contributed significantly to its solid performance, although the Hey Dude brand saw a revenue decline.

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