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On Wednesday, UBS analyst Jay Sole increased the price target on Crocs stock (NASDAQ:CROX) to $132 from the previous $122, while keeping a Neutral rating on the shares. The revision follows Crocs’ fourth-quarter 2024 earnings, which slightly exceeded expectations. According to InvestingPro analysis, Crocs is currently trading below its Fair Value, with the stock showing a significant 21% return over the past week.
Sole explained that the earnings performance prompted an 8% hike in the price target. However, the Neutral stance persists due to the perception of Crocs as a low-growth company. The analyst forecasts a modest 1% five-year EPS compound annual growth rate (CAGR) for Crocs, which is believed to warrant a low-growth valuation consistent with market sentiment. InvestingPro data reveals strong fundamentals, with impressive gross profit margins of 59% and a robust return on equity of 58%.
The UBS analyst elaborated on the absence of a catalyst that could potentially elevate the price-to-earnings (P/E) ratio for Crocs. According to Sole, for Crocs to achieve a higher P/E ratio, the brand would need to demonstrate accelerated sales growth in North America. Nonetheless, the analyst expressed skepticism about this occurring in the near term (NTM).
Crocs’ recent earnings report, which surpassed analysts’ predictions, played a key role in the revised price target. Despite this positive development, UBS’s outlook on the stock remains cautious, reflecting a broader market consensus that does not foresee significant growth potential for Crocs in the immediate future.
In other recent news, Crocs Inc. reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $2.52, above the forecasted $2.27. The company’s revenue also exceeded projections, reaching $990 million compared to the anticipated $963.96 million. This strong performance highlights Crocs’ robust market presence and operational efficiency. Additionally, BofA Securities raised its price target for Crocs to $153, maintaining a Buy rating due to the company’s positive earnings report and attractive risk/reward profile.
The unexpected rise in direct-to-consumer sales for the HeyDude brand during the fourth quarter was noted as a positive development, despite a 13% decline in HeyDude brand revenue for the year. Crocs’ full-year revenue reached $4.1 billion, marking a 4% year-over-year increase, with the Crocs brand revenue growing by 10% to $3.3 billion. Analysts from BofA Securities have increased their 2025 earnings per share forecast for Crocs by 6% to $13.30, citing stronger sales projections and an improved margin outlook.
Looking ahead, Crocs projects enterprise revenue growth of 2-2.5% for 2025, with the Crocs brand expected to grow by approximately 4.5%. However, the HeyDude brand is anticipated to decline by 7-9%. The company maintains an adjusted operating margin target of around 24% and provides an adjusted diluted EPS guidance of $12.70-$13.15 for the year. CEO Andrew Rees expressed confidence in the company’s growth potential, particularly in international markets, highlighting significant opportunities for expansion.
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