Piper Jaffray Raises Estimates/Price Target on Crocs (CROX)

Piper Jaffray is out with a brief research report this morning, where it reiterates its Overweight rating on shares of Crocs Inc. CROX; it has a $15 price target on the stock. The PJ analysts said, “We are reiterating our Overweight rating and raising our EPS ests following meetings with management this week. Significant channel & assortment opportunities across global geographies give the company a long runway for growth. In addition, distribution rationalization and increasing direct to customer sales appear to be having a positive effect on sales and margins. We are raising our FY10E EPS est to $0.55 and FY11E EPS to $0.74. Our price target has increased to $15 based on the same 20x multiple.” They noted, “Europe is currently less than 20% of total revenue and in absolute dollars was 40% lower in 2009 than in 2007. We believe there is substantial room to grow as developed markets such as Germany and the UK have room to double over time. Smaller emerging markets such as Russia and Eastern Europe could grow multiples of the current base. Asia is also growing quickly with Q1 wholesale up 50% and retail up 19%. Japan represents 40% of Asia, but we expect this to decrease as China, Korea and Taiwan accelerate.” They also said, “The company currently offers 200 different styles across a broad array of designs and price points. We expect the total to grow to 300 styles in the next couple years. We are encouraged by the diversification of the assortment as it supports multiple channels and a broad demographic. The company plans to expand further into fashion products for women and children as well as a fitness line over the next two quarters and we believe this speed to market is a hallmark of the Crocs business model. The Classic style has dropped to approx 16% of sales and judging by the new assortment we expect it to decrease further. Kids remains 30% of total revenue.”