Skechers USA (SKX) is an "underappreciated" growth stock with strong earnings potential despite near-term challenges, UBS Securities said in a report Friday.

The footwear company's strong global brand, robust product demand, and superior distribution model will drive faster-than-expected sales, earnings before interest and taxes margin, and earnings growth, UBS said, adding that its superior distribution and growth prospects make it a better investment than Nike (NKE).

The company reported Q4 earnings of $0.65 per diluted share, up from $0.56 a year ago, with sales rising to $2.21 billion from $1.96 billion for the quarter ended Dec. 31.

The brokerage has lowered the company's 2025, 2026, and 2027 earnings per share estimates by nearly 11%, 13%, and 9%, respectively, citing unfavorable foreign exchange fluctuations, a higher tax rate, and macroeconomic challenges in China. Despite these short-term hurdles, it remains confident in Skechers' long-term growth potential, the report said.

UBS maintained a buy rating on Skechers and adjusted its price target to $90 from $92.

Shares of Skechers were down more than 10% in recent Friday trading.

Price: 67.50, Change: -8.12, Percent Change: -10.74