The Setup for Skechers USA Inc (SKX) Remains Favorable: B. Riley

Jeff Van Sinderen believes that SKX shareholders’ best days are ahead.


Skechers USA Inc (NYSE:SKX) stunned the Street with impressive quarterly results, sending shares rising 40% in Friday’s trading session. Specifically, the footwear giant reported Q3 earnings excluding items of 59 cents a share, beating consensus estimates of 43 cents a share. Revenue rose to $1.1 billion, a quarterly record for the company, from $942 million a year ago, while consensus was calling for revenue of $1.07 billion.

In reaction, B. Riley analyst Jeff Van Sinderen reiterates a Buy rating on SKX, with a price target of $37, which represents a potential upside of 10% from where the stock is currently trading. (To watch Van Sinderen’s track record, click here)

Van Sinderen commented, “We had felt that the pull-back over the last few months already largely reflected anticipated expense deleverage slated for Q3, but what it did not price in was a revenue beat and potential acceleration of domestic for ‘18, substantial expense leverage, etc., all of which appear increasingly likely to materialize. With an arguably perverse investor focus on domestic, maybe investors will get more upbeat about ‘18 (despite that some seem to be practically ignoring the evidence that roughly half the business- the fastergrowing portion- is international).”

The analyst continued, “With revenue growth re-accelerating (including domestic), led by international and retail, EPS inflection indicated for 2H and potential for substantial operating margin leverage in ‘18, we feel that the setup for SKX remains favorable. In our view, the stock price barely being back to where it was in July (after-market price), presents an opportunity. In addition to the broad, diverse product lines that have been getting strong traction at retail, we think the Spring ’18 line looks even better. Further, the company has recently launched new product in Asia to fanfare that could be similar in the U.S. when that product reaches our shores.”

Wall Street agrees with Van Sinderen that this footwear chain is one to watch, as TipRanks analytics exhibit SKX as a Strong Buy. As of this writing, all the six analyst polled in the past 3 months are bullish on Skechers stock. With a return potential of 7%, the stock’s consensus target price stands at $36.SKX analyst ratings chart

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