Crocs’ (NASDAQ:CROX) shares rose around 3% Wednesday after Loop Capital upgraded it to “Buy” status from “Hold,” citing a favorable valuation and growth prospects of its Hey Dude Brand.
The firm set a target price that implied a potential upside of nearly 12% for the stock.
Laura Champine, Loop Capital analyst, highlighted the potential for growth in direct-to-consumer sales (DTC) by 2024. She said that management had sounded confident at a recent conference of investors about expansion.
“We believe valuation is attractive and the company sounded like it was on plan at our recent conference,” Champine wrote Wednesday.
“Management expects DTC growth this year at Hey Dude and we think that our expectation of 1% growth may prove to be conservative. She said Hey Dude is a brand that does not make easy comparisons. DTC could show upside growth in the first quarter as the brand has a -11% YoY.
HEYDUDE reduces production in China due to US tariffs
Crocs stock was volatile over the last week, rising more than 5% after President Donald Trump announced an additional 10% tariff for Chinese goods.
In response to previous tariffs, the company has shifted production away from China.
Champine pointed out that the 10% additional tariff announced recently on Chinese goods was not part of CROX’s earlier outlook.
Hey Dude has reduced its production in China from 35% to 27%, a huge shift to adapt to the volatile tariff climate.
Loop Capital believes the uncertainty in the market surrounding tariffs is creating a buying opportunity.
Stifel reiterates bullish outlook for CROX
Stifel analysts reiterated their Buy rating for Crocs shares on Monday and maintained a $138 price target.
Stifel expressed its confidence in Crocs’ future performance following discussions with Erinn Murph, Senior Vice-President of Investor Relations & Strategy, Crocs.
Their analysis revealed that Crocs has a strong margin profile. This includes a gross margin of 58.76% and a return on assets of 20.09%.
Analysts pointed out that the market, based on estimates for calendar year 2025, may not fully recognize the international growth prospects, and could be underestimating HEYDUDE’s contribution.
BoFA optimizes Crocs North American sales by 2025
Christopher Nardone, an analyst at BofA Securities, also reiterated his Buy rating for Crocs in the last month. He set a price goal of $153.
He expressed optimism about Crocs’ North American Sales, which could see modest growth by 2025. This is supported by a large wholesale order book in the next six-months and upcoming product innovation.
Consumer interest is expected to be boosted by new product launches such as the InMotion Clog, priced at $60. Also, the expanded sandal offering and a focus on slippers during the second half of the calendar year are expected.
Sales momentum is likely to be boosted by the continued growth of Jibbitz accessories as well as brand collaborations.
Analysts predict that Crocs will see a rebound in second quarter sales despite a possible decline in the first quarter due to calendar shifts, and the comparisons made with the strong growth of the previous year.
In 2025, international markets will be the main driver of brand growth.
This post Crocs Stock Gains as Loop Capital Sees Buying Opportunity Despite Tariff Concerns may be modified as new developments unfold.
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