- Piper Jaffray is positive on Crocs (NASDAQ:CROX) following recent visit to co's China manufacturing facilities.
Firm thinks Crocs is at an inflection point in terms of cost leverage as diversification of product offering, sales channel, and geography provide catalysts for pricing power and margin expansion.
They are highly encouraged by the growing demand for the Crocs brand and rapidly expanding
distribution through both first-party and third-party doors in Asian markets. The company is opening branded retail outlets in high-growth markets, establishing a brand presence similar to the kiosk-model in domestic markets. Based on a population and assumed market potential, the firm estimates the company is in less than 10% of the total potential doors (est. near 11,500) in the Asian region.
Firm is raising their price target from $40 to $47. They think visibility around FQ4 sales and FQ1-FQ2 bookings is largely improved, providing support to firm's valuation objective. Additionally, they maintain an upward bias to earnings estimates.
Notablecalls: CROX reports earnings after the close on Thursday, November 2. Note that Baird is out previewing the qtr saying that for Q206 , CROX reported a $0.17 positive surprise, and they believe another large upside surprise is likely; however, they also believe that an earnings surprise is already in the stock, and they would remain on the sidelines, especially as Q406 is likely to be down from Q306 and as FY07 visibility remains limited. I would think about cashing in some chips ahead of the qtr. Possiblity into the buy interest following Piper's tgt raise.
Firm thinks Crocs is at an inflection point in terms of cost leverage as diversification of product offering, sales channel, and geography provide catalysts for pricing power and margin expansion.
They are highly encouraged by the growing demand for the Crocs brand and rapidly expanding
distribution through both first-party and third-party doors in Asian markets. The company is opening branded retail outlets in high-growth markets, establishing a brand presence similar to the kiosk-model in domestic markets. Based on a population and assumed market potential, the firm estimates the company is in less than 10% of the total potential doors (est. near 11,500) in the Asian region.
Firm is raising their price target from $40 to $47. They think visibility around FQ4 sales and FQ1-FQ2 bookings is largely improved, providing support to firm's valuation objective. Additionally, they maintain an upward bias to earnings estimates.
Notablecalls: CROX reports earnings after the close on Thursday, November 2. Note that Baird is out previewing the qtr saying that for Q206 , CROX reported a $0.17 positive surprise, and they believe another large upside surprise is likely; however, they also believe that an earnings surprise is already in the stock, and they would remain on the sidelines, especially as Q406 is likely to be down from Q306 and as FY07 visibility remains limited. I would think about cashing in some chips ahead of the qtr. Possiblity into the buy interest following Piper's tgt raise.
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