Crocs Inc. - Love em, hate em, the analysis is in their favor

Crocs, Inc. (Public, NASDAQ:CROX) shareholders have been beat bad with this stock and most have left it for dead. Just when you thought the shares wouldn't fall under $20, they did. All the way down to $16.14. Really, can it get any worse? The Masters believe the worst is behind us.

Fad, momentum stock, short lovers haven, the list is endless. Crocs' shares have a 30% short interest; the odds are against you will make money if you buy the stock. Try and find a positive article on Crocs Inc, it's hard. But Financial Blog Legend NotableCalls called the Crocs bottom a few weeks ago and the last two days has covered the analyst action.

According to NotableCalls, Piper Jaffray is positive on Crocs Inc (CROX) following two days of meetings with management. They still have a buy on the stock and are standing buy their $67 target price. Depreciation in CROX shares of late, they believe, is a result of an exhausted shareholder base, lack of clarity around sales & inventory relationship, and anxiety with respect to fad speculation. As they revisit their model, the firm remains comfortable with current assumptions, believing that underlying demand remains firm and growth rates are reasonable.

Piper is comfortable with their $225M (v. $230M Street) top-line estimate in FQ1, given evidence of more conservative inventory planning at the retail level. Crocs continues to work toward a higher pre-book rate near 40% (v. ~20% LY), with the balance of sales being derived from in-season deliveries.

Baird is out positive on CROX as well, following meetings with management over the past couple of days. They note CROX has spent a lot of time discussing its inventory and continues to do so. But short of reporting a sequential drop in inventory, which isn't likely until Q308, it doesn't seem like investors will be convinced that CROX doesn't have an inventory problem. One thing to note about its higher inventory level is that the company's fill rates have improved dramatically, and this has improved its customer satisfaction ratings as well.

According to the firm CROX acknowledges that the U.S. retail environment has gotten softer and this is adversely affecting its business, as it is many other companies. However, CROX still reports that its product is selling well, and that there is a broader assortment of its product at retail, with many of its newer styles getting good traction. Additionally, the company is optimistic about its back-half prospects, based largely on its fall prebook orders, namely on the strength of its Fuzz Collection.

International is a bigger part of the company's growth story than the U.S. CROX continues to see opportunity in Europe, Asia and developing markets such as China, Brazil and India. Additionally, the company's international accounts were underserved in FY07, as supply was concentrated on satisfying U.S. demand. For FY08, CROX is now in a better inventory position across the globe and more of its international accounts are being offered a broader assortment of product.

Baird's price target is $50, based on a high-teens multiple of one-year forward EPS estimate of $2.82. Maintains Outperform.

StreetInsider.com pointed out today that an insider at Crocs purchased 260,000 shares. They expect to see more insider purchases as executives are permitted to buy shares. There is a rule that if you sell stock, you have to wait 6 months to buy again and that 6 month period ends for several executives within the next couple of months.

Fellow Masters, it's a tough call if you've been beat by investing in CROX, but this stock staying under $20 is just as crazy as it hitting $16 a share.

Disclaimer: The Author does not have a position in CROX.

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