Argus dropped its rating on Skechers USA Inc. ( NYSE: SKX ) to Hold from Buy after taking in the footwear seller's recent earnings report.
Analyst John Staszak expects the company to face continued supply-chain disruptions along with pressure from COVID lockdowns in China.
"We thus believe that consensus earnings estimates are too high and expect them to decline. At the same time, we look for Skechers to continue to develop innovative products and expand through new store openings and international distribution agreements."
At the moment, Argus sees SKX shares fairly valued at 14.6X the firm's 2022 EPS estimate vs. the five-year average of 16.8X. Argus said it will consider an upgrade if COVID restrictions in China ease and the company's supply chain improves.
Shares of Skechers ( SKX ) moved 0.46% higher in early trading on Tuesday. The stock has recovered more than half of its post-earnings loss from October 25 when guidance disappointed investors.
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Skechers is cut at Argus due to near-term headwinds