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Crocs, Inc. (CROX) Reduces Q3 Sales Guidance: Analysts Weigh In

By Christine Brown 

Over the last week, shares of Crocs, Inc. (NASDAQ:CROX), the retail company most known for its rubber sandals, have dropped 21 percent. The company lowered its sales guidance for Q3 from $280-$290M to $270-$280M due to an incremental currency headwind of $4M and a $6M impact from slower-than-expected trends in China. Piper Jaffray and Stifel Nicolaus weigh in.

On October 1, analyst Erinn Murphy from Piper Jaffray downgraded Croc’s stock from Overweight to Neutral, and reduced her price target to $12 from $17. Murphy commented, “During the session, we learned more about the positive inflection in the SS16 orderbook, concentrated focus on global marketing, cost saving initiatives and supply chain opportunities.” While Murphy expressed confidence in the long-term potential of this turnaround, she expects it will take longer to see results.

Murphy has reduced her FY16 EPS estimate to $0.15 from $0.67. She attributed this “staggering” reduction to the following factors, including; sales growth of 4 percent; gross margin contraction of 100bps; leveraging of SG&A dollars by 190 bps, or a marginal increase of 3 percent on a dollar basis; tax rate of 23 percent; and buyback of 3.2M shares

After factoring in the latest Q3 figures and the expectations for FY16, as per Murphy the long-term guidance means ““sales growth accelerates into 2018 which to us appears challenging to support in this environment.” She concluded by saying that until there’s a strong evidence of improvement in sales, the company’s stocks would probably be “dead money.”

Erin Murphy has rated Crocs 17 times since 2013, earning a 0% success rate recommending stocks with a -22% average loss per rating.

On October 1, Jim Duffy from Stifel Nicolaus maintained a Buy rating on Crocs; however, he reduced the price target to $16, from the earlier target of $17.

Jim Duffy has rated Crocs 7 times since 2010, earning a 71% success rate recommending the company with a +14.9% average return per rating.

As per TipRanks’ statistics, of the 3 analysts who have recently rated the stock, 2 have rated Crocs as a Buy and 1 as a Hold. None of the analysts haven given a Sell rating to Crocs. The average 12-month price target is $15.67, marking an upside of 38% from present levels.