Crocs Kicks Up Its Outlook: Needham Lifts Price Target On Strong Q1 Stride

Needham analyst Tom Nikic on Thursday reiterated a Buy rating on the shares of Crocs Inc CROX and raised the price forecast from $118 to $129.

CROX delivered strong first-quarter results, outperforming expectations on revenue and earnings, with notable strength in gross margins and free cash flow.

Positive commentary on tariffs also boosted sentiment. Despite uncertainty leading to the withdrawal of FY25 guidance, the analyst has raised EPS estimates for FY25 and FY26 and increased the price forecast, citing attractive valuation and favorable risk/reward.

Crocs management shared a more optimistic outlook on tariffs, estimating a smaller-than-expected impact on costs. A 10% tariff on all U.S. imports would reduce gross margins by 100–125 basis points, while a 145% tariff on China-made goods would result in a $130 million cost hit, about half of what was feared.

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The company plans to shift nearly all U.S.-bound production out of China if high tariffs persist and has already begun raising prices and identifying $50 million in cost savings.

Crocs reported solid performance, particularly in international markets, with core brand sales up 4% in constant currency, beating forecasts.

North America declined 3%, slightly better than expected, while momentum improved in March and continued into April.

Despite strong overseas growth, especially a 30%+ surge in China and solid gains in Western Europe management warned that cautious wholesale behavior could pressure second-half results.

HeyDude’s performance came in better than anticipated, with sales down 9.5% in constant currency versus expectations of a steeper mid-teens drop.

While wholesale declined 17%, direct-to-consumer grew 8%, showing improved digital traction. Recent collaborations with celebrities like Sydney Sweeney and Jelly Roll have helped boost brand momentum.

Crocs saw a 180 basis point year-over-year increase in consolidated gross margin, led by a 260-point gain at the core brand, though partially offset by a 120-point decline at HeyDude.

With strong margins in place, the company plans to invest more in marketing to capture market share despite a challenging environment, noted the analyst.

Price Action: CROX shares traded lower by 0.95% at $109.60 at last check Friday.

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