Crocs Stock: Why Analysts Are Saying You Should Buy Now

Crocs’ cult like following among consumers might be trickling over to Wall Street.

Susquehanna Financial Group LLLP analyst Sam Poser today joined the chorus of analysts singing the praises of the brand — issuing a call to action to “Buy Crox” in a note to clients.

“2Q19 sales to date are likely outperforming guidance provided in late May and the momentum continues to accelerate,” Poser wrote. “That momentum has resulted in increasing production in China to meet demand from consumers and wholesale partners — a ‘high quality’ problem.”

After a period of softness, the light weight clog maker’s shares also popped last week — surging 9% on Friday — on the heels of an upgrade, to outperform, by Baird analyst Jonathan Komp.

“Crocs has been among the hardest hit consumer/retail stocks since the start of May, unjustly so in our view, given signs of continued brand momentum — [with] six quarters growing at double-digits and counting plus a much better run company overall,” Komp wrote last week. “We see potential for upside to Q2 estimates and for brand heat to carry well into 2020 given a robust clog/sandal pipeline, planned additional collaborations, and emerging international opportunities.” (Crocs predicts its Q2 revenues will land between $350 and $360 million, a gain of 7% to 10% from the comparable period.)

Since its headline-making partnership with Drew Barrymore in 2016, the Niwot-Colo.-based brand has stepped on the gas when it comes to collaborations, tapping buzzy names like Post Malone and Zooey Deschanel as ambassadors, with the former enjoying a couple sold out releases to date.

But it’s not just celebrities the brand has forged new alliances with as it rides the wave of 1990s and early 2000s nostalgia among teens and young adults as well as its own multi-layered business strategy — which has seen it put renewed focus on the Classic clog as well as clean up distribution. Crocs last week announced the launch of a special-edition Barneys New York XO Crocs. Before that it made a splash in high-end fashion back in 2016 when Christopher Kane sent jewel embellished marble Crocs down the runway at London Fashion Week.

The brand this month revealed plans to reduce its production in China amid an ongoing trade dispute with the U.S. and Poser noted that the company’s exposure to potential new tariffs will be “small” as it makes its way out of the region.

“Momentum in clogs remains robust and continues to build across geographies,” he added. “Crocs is also gaining traction across other categories and demographics. The 25%-plus pullback post 1Q19 earnings in early May offers a compelling buying opportunity.” (Crocs stock tumbled following first quarter earnings results in May — even though those results topped estimates across the board.)

When FN sat down with the brand’s president and CEO Andrew Rees earlier this year, he said he believed Wall Street was in the early stages of recognizing the brand’s potential for a major resurgence.

“This is a brand that has a tremendous long-term runway on a global basis,” Rees said back in Februrary. “I don’t think the external community necessarily looks at it like that yet. [Meanwhile], the investment community is just starting to come to the realization that what we’ve been saying might actually be true. In the next 12 to 18 to 24 months, you’ll start to see the [both of these groups] come to [align more closely] with our perspective.”

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