Wednesday, March 07, 2007

Calls of Note Part 4

- Piper Jaffray notes they recently visited Crocs' (NASDAQ:CROX) Japanese operations and were highly impressed with the executive team, consumer adoption of the brand, regional sales potential, and initiatives underway to elevate the contribution to earnings from the Asian marketplace. The firm has increased confidence with respect to FY07 estimates and specifically management's ability to successfully identify and expand brand distribution into untapped markets. They believe international market growth is outpacing internal forecasts and they remain confident in international sales trending toward 40%-45% of total sales in FY07.

Global distrib. underappreciated: At roughly 21K doors (mid-Feb), current mkt cap of ~$1.88B suggests value of <$90K/door for Crocs' present distribution infrastructure. Piper believes the market is undervaluing potential upside from distribution leverage as they assume sales/door less than 50% of peak potential ($27K/avg door in FY06).

Maintains Outperform and $70 tgt.

Notablecalls: Not actionable but good to know category.

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