Skechers U.S.A. (SKX) is heading into fiscal Q1 earnings with a wide range of potential outcomes, as solid underlying fundamentals are offset by uncertainty surrounding recently announced US tariffs on Chinese imports, which could result in a significant downward revision to full-year EPS guidance, UBS Securities said in an earnings preview.

UBS said in a Sunday note that the setup appears balanced heading into the print, given the lack of clear investor expectations around the potential impact of tariffs. The firm believes a guidance cut of $0.50 to $1.00 is possible, but said the market reaction is difficult to gauge due to the low conviction in investor positioning.

Investor sentiment on Skechers appears negative, with short interest rising and the stock underperforming the broader market, as investors remain divided on the potential impact of tariffs, UBS added.

Direct-to-consumer sales and international search interest in Skechers remained strong during the quarter, but increased discounting points to heightened promotional activity, the firm said.

UBS reduced its price target on the company's stock to $64 from $65 and kept its buy rating.

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