Skechers (SKX) Earnings: The Bulls Are Getting Nervous, But This Analyst Says Buy on Weakness

Skechers (NYSE:SKX) shares plummeted after yesterday’s earnings report, with shares down 27% as of this writing. If you are a Skechers investor, the question you must ask yourself is: did the management’s weak guidance justify a $1.5 billion decline in market value? After analyzing the data, B.Riley FBR analyst Jeff Van Sinderen says “no.”

Sinderen commented, “Sales guidance includes expectations of domestic wholesale down msd and international wholesale up, probably better than 1Q and on pace with the last couple of quarters. Distributor revenue in 2Q is expected to be negatively impacted by weak performance by distributors in the Middle East, where considerable geopolitical strife continues. We do not believe this to be a significant factor beyond the near term and note that this improves overall margin, with distributors representing the lowest-margin group within international wholesale.”

“Overall, nothing material has changed in the company’s longer-term outlook. We view the downdraft [in stock price] around what appears to be a “classic” 2Q push-out-related/guide-below as an opportunity to increase positions in a company that is likely to continue to outperform peers. We expect P&L leverage to materialize in FY18, and more substantially into FY19. With strong wholesale growth, an exceptional company-owned retail store comp trend, and strong e-comm growth, we are notching up our full-year sales/EBITDA estimates.”

As such, Sinderen reiterates a Buy rating on Skechers shares, with a price target of $50, which implies an upside of 63% from current levels. (To watch Sinderen’s track record, click here)

How does Sinderen’s bullish bet weigh in against the Street? It appears the analyst is not the only one enthusiastic on this footwear chain’s prospects, with TipRanks analytics demonstrating SKX as a Strong Buy. Out of 5 analysts polled in the last 3 months, 4 are bullish on Skechers, while 1 remains sidelined. With a return potential of nearly 40%, the stock’s consensus target price stands at $43.00.


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