Is Crocs A Fad or Did HeyDude Expand Too Fast? Wedbush Analyst Weighs In

Wedbush analyst Tom Nikic reiterated an Outperform rating on the shares of Crocs, Inc. CROX with a price target of $153.

According to the analyst, CROX remains a controversial and hotly-debated name, with the big question on the minds of many investors shifting from "Is Crocs a fad?" to "Did management distribute HeyDude too quickly?"

Amid this evolution of the CROX story, the analyst still remains positive into the stock's Q2 EPS print on July 27 before the market opens.

Though the analyst believes it's fair to question the pace of distribution expansion at HeyDude, they're lapping the biggest channel fill headwind in Q2, so the analyst said the brand will reaccelerate in 2H.

As a result, the analyst has raised Q2 EPS forecast to $3.24 from $2.98, and FY23/24 forecasts move to $11.98/$13.48 from $11.58/ $12.90.

The big surprise last quarter was the slowdown at HeyDude, and since that's now out in the open, the analyst sees less risk of investors being blind-sided by some unexpected bad news.

The analyst thinks the core Crocs brand has less 2H U.S. Wholesale risk than many other companies, as they are lapping big 2H declines from a year ago.

The stock has a near-term trading catalyst from the resumption of share buyback, now that they've adequately deleveraged the balance sheet, noted the analyst.

Price Action: CROX shares are trading higher by 1.02% at $124.06 on the last check Monday.