Skechers U.S.A. Inc. got a temporary boost in its stock price after Bank of America Corp. upgraded its rating on the shares to a buy.
The Manhattan Beach footwear manufacturer saw its stock price close at $72.87 – or a 2.6% increase over the previous day’s close of $71.05 – on June 7, the day the upgrade was announced.
Its July 1 closing price of $67.53 represents an 8.7% increase since the start of the year and a 27.7% increase year over year.
The stock closed at $67.32 on July 3.
Christopher Nardone, a Bank of America analyst who follows Skechers, in addition to upgrading the rating also increased its price target on the stock from $71 to $78. The Charlotte, North Carolina-based financial institution had initiated coverage of Skechers in March with a neutral rating of its stock.
As reported by financial website Insider Monkey, Nardone underscored several key factors driving the upgrade – starting with the company’s robust product pipeline – and emphasized its ability to innovate and introduce compelling footwear offerings to the market.
Additionally, the analyst pointed to Skechers’ strengthened direct-to-consumer strategy, which is expected to enhance customer engagement and drive sales growth, the Insider Monkey story said.
“Furthermore, Nardone identified the potential for Skechers to capture additional market share in both casual and performance footwear segments, further bolstering the company’s growth trajectory,” the story added.
Moreover, the analyst highlighted Skechers promising prospects in international markets – particularly in China – where the company has been experiencing robust growth, the website’s story continued.
Q1 financial results
According to the first quarter financials release from April 25, sales of Skechers products in China brought in $320 million – a 13.3% increase from the $282 million in revenue from the first quarter of last year.
For all of last year, the company reported China sales of $1.2 billion.
For the quarter ending March 31, Skechers reported an adjusted net income of $212 million ($1.37 a share), compared to an adjusted net income of $151 million (96 cents) in the same period of the previous year. Revenue increased by 12.5% from the first quarter of the prior year to $2.25 billion.
David Weinberg, chief operating officer of Skechers, said that the company experienced growth of 17% in its direct-to-consumer segment, 10% in the wholesale business and increases of 15% internationally and 8% domestically in the first quarter.
For the quarter, international sales represented 65% of total sales, and Skechers achieved growth in all regions: 17% in Europe, the Middle East and Africa; 16% in Asia Pacific; and 8% in the Americas, Weinberg added.
“With the strong global demand for our brand and a healthy inventory position comprised of proven sellers, innovative technologies and new product categories, we believe that we have significant opportunities for growth across the globe, and we remain confident in our on-going success,” Weinberg said in a statement.