From Oversold To Outperform: Analyst Highlights Crocs' Alluring Valuation And Robust Margins

Raymond James analyst Rick B. Patel upgraded the shares of Crocs Inc CROX from Market Perform to Outperform and announced a price target of $110.

The analyst says the stock is oversold (CROX -31% vs S&P Retail -11% over the last 3 months), and risk/reward is now favorable given a highly discounted P/E of about 6.5x (5-year average 16x) and EV/ EBITDA of ~6x (5-year average 11.5x).

Crocs surprised to the upside in 1H and the analyst sees further momentum including attractive overseas opportunity. 

Despite recent challenges, CROX maintains excellent operating margins that likely have upside potential, noted the analyst.

The Crocs brand remains strong, and the HEYDUDE brand affinity is holding up despite near-term challenges, according to the analyst.

The analyst says valuation is very attractive relative to peers who have similar growth expectations but lower margin profiles versus CROX.

Moreover, the analyst noted that Crocs’ strong free cash flow enables accretive buybacks and debt paydown.

The price target is based on a P/E of 8.5x on the analyst’s 2024E EPS of $13.04.

Also Read: Birkenstock Prices IPO At $46 Per Share: Everything You Need To Know About The German Shoemaker

Price Action: CROX shares are trading higher by 1.99% at $86.13 on the last check Friday.