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Analyst finds some gems in stodgy shoe market

NEW YORK (AP) -- The shoe market is mainly mature in the U.S., an analyst said Tuesday, but there are some good buys in the sector, particularly athletic shoes and the long-lasting Crocs Inc., whose shares responded with a big gain.

Overall, Goldman Sachs analyst Taposh Bari initiated his coverage of the sector with a "Neutral" rating and said most companies are older and at the peak of the fashion cycle, so he does not expect broad gains in the sector.

One exception was Crocs Inc., which makes colorful plastic shoes, and he gave it a "Buy" rating, saying that investors have misinterpreted the shoe brand as a fad.

"We see Crocs as a lifestyle brand with global appeal that appears both proven and sustainable," he wrote in a note to investors.

Crocs shares climbed $1.17, or 9.4 percent, to $13.52 in afternoon trading after rising as high as $13.74 earlier in the session.

Another exception is the athletic shoe market, he said, which will likely benefit from fashion trends and improving profitability, Bari said. He initiated coverage of Foot Locker Inc. with a "Buy" rating. Its shares slipped 17 cents to $35.7 in late trading after rising as high as $35.41 earlier in the session.

Less appealing is Steve Madden Ltd, Bari said, and gave the stock a "Sell" rating. He said the non-athletic shoe trends have peaked, and Steve Madden is dependent on the fashion cycle. Its shares rose 37 cents to $44.45 anyway.

Other shoe makers fit in with his overall "Neutral" view of the sector, including The Finish Line Inc., Wolverine World Wide Inc. and Deckers Outdoor Corp.

The Finish Line shares fell 41 cents to $20.24 in afternoon dealings while Wolverine World Wide shares fell 69 cents, or 1.6 percent, to $43.