On Tuesday, Piper Sandler maintained a positive stance on Skechers USA (NYSE:NYSE:SKX), reiterating an Overweight rating with a $69.00 price target. The firm acknowledged the brand's progress in the competitive footwear industry, noting Skechers' rise in popularity among teenagers—a demographic not traditionally crucial for the company but indicative of its growing appeal.
Skechers has seen an upward trend in its market position, climbing to the No. 14 favorite footwear brand, an improvement from No. 15 in the Fall and No. 16 in Spring 2023. The brand's mindshare, a measure of consumer awareness and perception, has increased by 20 basis points year-over-year. This jump in rank reflects Skechers' enhanced visibility and favorability in the marketplace.
The company has also gained traction in the athletic footwear segment, now ranking as the No. 10 favorite among American teens, up from No. 11 last spring. This rise is possibly attributed to Skechers' recent initiatives in basketball and soccer, sports with substantial youth followings and global appeal.
While teen mindshare is not typically a significant factor for Skechers' overall market strategy, the firm views the incremental gains in footwear rankings as a positive sign. These improvements suggest that Skechers is resonating with a younger audience, which could bode well for the brand's future growth and presence in the athletic segment.
Piper Sandler's continued endorsement of Skechers at a $69.00 price target reflects confidence in the company's direction and potential for further growth. The firm's analysis points to a brand that is successfully navigating the competitive landscape and making inroads with new consumer demographics.
InvestingPro Insights
Recent data from InvestingPro underscores Piper Sandler's optimistic outlook on Skechers USA (NYSE:SKX). Skechers is currently trading at a P/E ratio of 16.55, which is considered low relative to its near-term earnings growth. This valuation metric, along with a PEG ratio of just 0.35 for the last twelve months as of Q4 2023, suggests that the stock may be undervalued given its growth prospects. Additionally, the company's liquid assets surpass its short-term obligations, indicating a healthy liquidity position that could support its ongoing initiatives in expanding market share among younger demographics.
InvestingPro Tips highlight that Skechers operates with a moderate level of debt and analysts predict the company will be profitable this year. Furthermore, the company has been profitable over the last twelve months, with a gross profit margin of 51.9%, reflecting efficient operations and strong pricing power. As an added note, Skechers' return on assets for the same period stood at 9.0%, showcasing its effective use of assets in generating earnings.
For readers interested in deeper analysis, there are additional InvestingPro Tips available that could provide further insights into Skechers' financial health and market potential. To explore these tips and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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