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
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.