CROX - Crocs: Why I Maintain A Bullish View

2024-02-04 20:51:08 ET

Summary

• Crocs management recently shared an updated outlook for FY 2023, underscoring robust momentum and profitability, projecting an expected 11% YoY revenue growth and over 29% operating margin.
• Looking ahead, I believe Crocs is well-positioned for a successful 2024, with strong growth prospects, particularly in the APAC region, and innovative product strategies aimed at expanding its market.
• Notably, Crocs' growth and profitability metrics outperform most peers. Yet, Crocs' current trading price is valued at less than 8x EV/EBIT.
• As a result of both strong commercial momentum and valuation, I reiterate a confident "Buy" recommendation for Crocs stock, with an updated target price of $180 per share.

Although Crocs ( CROX ) shares have lost value since I last covered the company with a "Buy" rating about 9 months ago, I maintain an optimistic fundamental outlook for the footwear brand. Specifically, I think the company's recently shared projections for FY 2023 results provide proof that the Crocs brand still enjoys strong commercial momentum while operating with a best-in-class profitability profile. Investors should note that Crocs now expects an 11% YoY growth in revenues paired with a >29% operating margin. Meanwhile, despite the promising fundamental business outlook, the current trading price of CROX is valued at <8x EV/EBIT (versus about 14x for the industry median). Considering updated valuation metrics, I estimate the intrinsic value of CROX to be around $180 per share....

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