On Friday, UBS reaffirmed its confidence in Skechers USA (NYSE:SKX), maintaining a Buy rating and a price target of $88.00. Skechers, recognized as the world's third-largest footwear company, is anticipated to reach $10 billion in revenue by 2026, according to UBS. The firm's analysis suggests that the market may not fully appreciate the strength of the Skechers brand and its potential for revenue growth.
Following a meeting with Skechers management on June 5th in New York City, UBS expressed reinforced belief in their positive outlook for the company. The firm projects that Skechers will achieve a compound annual growth rate (CAGR) of approximately 15% in earnings per share (EPS) over the next five years.
The sustained growth trajectory is expected to result in multiple earnings surprises in the near term (NTM), potentially propelling the stock towards the firm's established price target. UBS's stance is based on the company's performance prospects and market positioning.
Skechers' journey towards this significant revenue milestone is seen by UBS as an underrecognized achievement that could lead to a reassessment of the stock's value by the market. The firm's forecast for Skechers includes a robust earnings performance that could surprise investors and influence stock movement in the upcoming months.
"In other recent news, Skechers USA Inc . has seen significant developments. BofA Securities has upgraded Skechers' stock from Neutral to Buy, raising the price target to $87.00 from the previous $71.00. This decision is influenced by an improving wholesale environment and stronger footwear trends. BofA Securities has also revised its earnings per share estimates for Skechers, expecting stronger revenues for the company in the future.
On the earnings front, Skechers reported a record-breaking first quarter in 2024, with sales reaching $2.25 billion, a 12.5% increase from the previous year. The company's gross margin improved to 52.5%, and the operating margin reached 13.3%. In terms of expansion, Skechers opened 52 new company-owned stores and 95 third-party stores in the first quarter. For 2024, the company plans to open between 155 to 170 new stores, aiming for $10 billion in sales by 2026. These are the latest developments shaping Skechers' financial landscape."
InvestingPro Insights
As Skechers USA (NYSE:SKX) strides towards its ambitious revenue goals, current metrics and analysis from InvestingPro offer a deeper look into the company's financial health and market potential. With a market capitalization of approximately $11.09 billion and a P/E ratio that stands at 18.91, Skechers presents itself as a company trading at a valuation that may attract investors looking for growth at a reasonable price. The PEG ratio, a metric that relates the P/E ratio to earnings growth, is particularly low at 0.41 for the last twelve months as of Q1 2024, suggesting that the company's earnings growth may not be fully reflected in its share price.
InvestingPro Tips highlight that Skechers is currently trading near its 52-week high and has delivered a strong return over the last three months, with a price total return of 16.21%. Additionally, analysts predict the company will be profitable this year, a sentiment backed by a solid gross profit margin of 52.79% for the last twelve months as of Q1 2024. Skechers' liquid assets also exceed its short-term obligations, which indicates a healthy liquidity position.
For investors seeking further insights, InvestingPro offers additional tips on Skechers, which can be explored further by visiting https://www.investing.com/pro/SKX. Don't forget to use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 11 additional InvestingPro Tips available, providing a comprehensive analysis for those looking to make informed investment decisions.
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