Outdoor financials: Analyst firm bullish on Crocs

Sterne Agee initiated coverage on Crocs (Nasdaq: CROX) with a buy rating, saying it expects third-quarter earnings to meet or top the company’s guidance.
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Analyst firm bullish on Crocs

Sterne Agee initiated coverage on Crocs (Nasdaq: CROX) with a buy rating, saying it expects third-quarter earnings to meet or top the company’s guidance.

Sterne Agee set a price target of $19 on the stock, implying an upside of nearly 29 percent from current levels, and said it expects the company's backlog at the end of the third quarter will be higher than the 41 percent figure it reported for the second quarter.

The health of the company’s wholesale business was a major point of emphasis for Sterne Agee, which said it anticipates wholesale revenue -- now 63 percent of the company’s total -- will grow at a double-digit percentage pace for at least the next two years. The firm also sees the company’s aggressive push into direct-to-consumer sales as a positive that should help margin growth.

Sterne Agee said in a client note: “In ‘11, CROX will be focusing on U.S. wholesale rather than retail as old relationships are mended and new wholesale relationships are forged. We also expect meaningful acceleration in wholesale revenue and margins in Brazil, France, Germany, and the U.K., all of which just have been brought in-house and should greatly benefit from the company's expertise and financial wherewithal.”

--Compiled by Wendy Geister

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