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On Thursday, Evercore ISI reiterated its Outperform rating on Skechers USA (NYSE:SKX) along with a $78.00 price target. According to InvestingPro data, the stock is currently trading at $59.03 and appears undervalued based on its Fair Value analysis. The company maintains strong fundamentals with a P/E ratio of 14.02, trading at an attractive valuation relative to its growth potential. The firm’s analysis suggests that, assuming equal manufacturing distribution between China and Vietnam and around 47% of revenues coming from the US, Skechers could face a gross margin compression of approximately 400 basis points. This is based on the assumption that 60% of the cost of goods sold (COGS) are raw materials costs. Currently, Skechers maintains a healthy gross profit margin of 53.15%, with revenue growing at 12.11% over the last twelve months.
The analysis by Evercore ISI pointed out that a decline in earnings per share (EPS) of over 30% could be possible if Skechers does not implement any pricing increases. To keep gross margin dollars stable, Skechers would need to raise prices by an estimated 4%, according to the firm’s calculations. InvestingPro reveals that 11 analysts have recently revised their earnings estimates downward for the upcoming period, with the next earnings announcement scheduled for April 24, 2025.
Evercore ISI’s comments indicate a wait-and-see approach, as the firm holds off on adjusting its estimates and target price until more details are available. "We await more details before we adjust our estimates and target price," stated the analyst from Evercore ISI.
Skechers has not yet provided any official statement or details regarding potential price increases or strategies to mitigate the anticipated impact on gross margins and EPS. The company’s financial performance and pricing strategy will be closely watched by investors and analysts alike, following these insights from Evercore ISI.
The current Outperform rating and price target reflect Evercore ISI’s ongoing confidence in Skechers’ stock performance potential, despite the challenges outlined in their analysis. The market will continue to monitor the situation as it unfolds and assess the implications for Skechers’ financial outlook. For deeper insights into Skechers’ financial health and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports, available as part of their coverage of over 1,400 US stocks.
In other recent news, Skechers USA Inc . reported its fourth-quarter 2024 earnings, which revealed a miss on earnings per share (EPS) expectations. The company posted an EPS of $0.65, falling short of the anticipated $0.74, and revenue also slightly missed forecasts, coming in at $2.21 billion against a forecast of $2.22 billion. Despite these misses, Skechers achieved full-year 2024 sales growth of 13%, reaching $9.04 billion, and a 26% rise in annual EPS, standing at $4.40. UBS maintained its Buy rating on Skechers, adjusting the price target slightly downward to $90 from $92, citing the company’s expansive global reach and strong product demand. Meanwhile, Barclays (LON:BARC) adjusted its price target for Skechers to $77 from $80, maintaining an Overweight rating but citing anticipated adjustments to financial performance, including lower sales forecasts and increased costs. Stifel also reiterated its Buy rating with an unchanged price target of $80, emphasizing Skechers’ strategic positioning and growth potential in international markets. These developments highlight the mixed analyst outlooks and the company’s ongoing strategic initiatives aimed at sustaining growth and market share.
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