Skechers Shares Jump After Q3 Earnings Beat, Analysts Lift Price Targets

Skechers USA Inc SKX are soaring higher after reporting a third-quarter earnings beat after the close Thursday.

The Manhattan Beach, California-based footwear brand delivered Q3 earnings of 58 cents per share, beating estimates by 6 cents. While the footwear maker missed sales estimates by $42 million, coming in at $1.176 billion, the company issued strong fourth-quarter earnings and sales guidance.

The Sell-Side Reacts

◘ Wedbush analyst Christopher Svezia maintained a Neutral rating on Skechers with a price target lifted from $28 to $29.

“While our estimates increase on a better-than-expected Q4 guide and U.S. wholesale outlook, DTC comps and sales in Europe remain weak, while visibility around expenses remains limited,” the analyst said.

◘ Wells Fargo analyst Tom Nikic maintained a Market Perform rating and raised the price target from $24 to $30.

The Q3 beat was driven by the long-awaited moderation of both SG&A and inventory growth, which were key given that elevated spending was the primary sources of angst on the Street in the first half of the year, he said.

“All in, this was yet another ‘noise’ print from SKX, but net-net it was a step in the right direction. However, we’ll need to see more of these positive ‘steps’ before we get constructive on the shares again."

◘ Buckingham Research Group analyst Eric Tracy reiterated a Buy rating and bumped the price target from $30 to $33.

“While we are encouraged by Q3 SG&A control, sustainability questions likely keep investors in ‘once bitten twice shy’ mode until a pattern of cost discipline emerges,” the analyst said.

Despite the run-up in the stock after the print, Tracy said he remains constructive and continues to see an attractive risk-reward profile.