Skechers USA Inc (NYSE: SKX) shares were trading sharply higher Friday, one day after posting a big second-quarter earnings beat and record quarterly net sales. Here's what two analysts had to say after the print.
Stifel analyst Jim Duffy said he is highly encouraged by the combination of strong end-market demand and SG&A efficiency and sees Skechers' double-digit growth and leverage capacity as deserving of a higher multiple.
“We see Skechers leveraging a speed-to-market advantage and scale advantage to gain share in the global footwear market. Led by international growth, we see multiple years of high single-digit/low double-digit capacity,” the analyst said in a Thursday note.
Stifel maintained a Buy rating on Skechers and raised its price target from $35 to $44.
Morgan Stanley analyst Lauren Cassel maintained an Equal-weight rating on Skechers and raised the price target from $29 to $34.
Despite several industry headwinds cited by other U.S. brands, Skechers posted a better-than-expected second quarter, the analyst said.
Stifel anticipates an even stronger second half, but remains cautious, she said.
"While there was a pullback in 2Q domestic advertising spend, management expects to see a similar amount of leverage for the third consecutive quarter as investments begin to bear fruit and select international regions’ profitability improves."
Morgan Stanley is bullish on the low-end consumer given secular tailwinds such as wage growth and tax cuts, Cassel said, adding that Skechers has a defendable competitive advantage within the footwear ecosystem.
Skechers shares were up 12.37% at $39.07 at the time of publication Friday.
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