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On Friday, Stifel analysts maintained a Buy rating on Crocs (NASDAQ:CROX) with a steady price target of $127.00. The firm’s analysis highlighted a strong first-quarter performance driven by international sales and margin growth. According to InvestingPro data, Crocs maintains impressive gross profit margins of 59.25% and trades at an attractive P/E ratio of 6.7x. Both Crocs and its recently acquired brand HEYDUDE contributed to the revenue increase, with notable sales momentum observed during March and April.
The analysts acknowledged the company’s decision to withdraw its full-year guidance amidst a resilient customer demand. They noted that the incremental tariff rate of 10% on non-Chinese goods, which could amount to a $45 million impact, is manageable for Crocs due to a $50 million savings initiative. The company’s strong financial position, evidenced by InvestingPro’s "GREAT" financial health score and current ratio of 1.52, suggests adequate resources to navigate these challenges. However, the analysts expressed concerns over the viability of importing to the U.S. if tariffs on Chinese imports, which constitute 13% of Crocs’ U.S. imports, were raised to 145%. This scenario could lead to an $85 million impact.
Crocs’ ability to divert and resource its exposure within six months was seen as a positive, but the situation for HEYDUDE, with its significant U.S. revenue reliance and Chinese sourcing, presents a greater challenge, potentially requiring a 12-month process to adjust. The analysts noted that the fluid trade policy environment could affect earnings power in the near term and might put pressure on HEYDUDE’s inventory supply.
Despite these challenges, Stifel’s outlook for Crocs remains optimistic. The analysts underscored the brand’s strength, multi-year cash generation potential, and operational flexibility as key factors supporting their Buy rating and 12-month price target of $127. With a return on equity of 54% and strong cash generation metrics, the company demonstrates robust operational efficiency. They also pointed out that while higher tariffs in Southeast Asia, particularly Vietnam which accounts for 47% of U.S. imports, pose a risk, the overall franchise strength is expected to sustain the company’s performance. For deeper insights into Crocs’ valuation and financial health, including 13 additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, Crocs Inc. reported a strong first quarter for 2025, with earnings and revenues surpassing forecasts. The company posted earnings per share of $3.00, exceeding analysts’ expectations of $2.48, while revenue reached $937 million, beating the forecast of $907.11 million. Needham analysts responded by raising their price target for Crocs stock to $129 from $118, maintaining a Buy rating due to the company’s robust performance. Despite these positive results, Crocs has withdrawn its full-year guidance due to uncertainties surrounding potential tariffs, reflecting caution in its future outlook. The company’s strategic focus on innovation and global market expansion has contributed to its strong performance, with the Crocs brand revenue growing by 4% to $762 million, offsetting a 10% decline in its Hey Dude brand. Crocs also repurchased 607,000 shares, demonstrating confidence in its future growth. Needham has increased its EPS estimates for fiscal years 2025 and 2026, citing an attractive risk/reward profile for the stock. The company remains focused on mitigating risks through sourcing adjustments and selective price increases.
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