Skechers soars after Buckingham upgrades after previewing new products
Shares of Skechers (SKX) surged in afternoon trading after an analyst from Buckingham upgraded the stock after viewing some of the footwear company's new products at a recent trade show in New York. BUCKINGHAM SAYS BUY: In a note to investors, Buckingham analyst Scott Krasik upgraded Skechers to Buy from Neutral and raised his price target on shares to $31 from $21 after viewing new products at the Fashion Footwear Association of New York, or FFANY, trade show that will debut at retail starting in the second quarter of 2017. The analyst said he believes the footwear company is a quarter away from a potential sales inflection, which historically has been a catalyst for the stock as investors prioritize sales momentum over earnings per share growth. Krasik also noted that, while fundamentals will likely continue to be pressured for the next quarter or two, the company's ability to cut inventory after the second quarter of 2016 diminishes the risk of another major negative EPS revision in the near-term. The analyst added that he believes the risk/reward with the stock is "extremely favorable." CEO SHARE BUY: After the market close yesterday, Skechers chief executive officer Robert Greenberg disclosed in a regulatory filing the purchase of 500,000 Class A shares of the company. The transactions were made in two equal tranches on November 28 and 29 at average prices of $22.18 and $21.75, respectively, according to the filing. Noting the move, Buckingham's Krasik said in his note that the insider purchase further supports his view of Skechers, as Greenberg has historically been a "good stock timer." Krasik noted that this was the CEO's first buy in 15 years. WHAT'S NOTABLE: B. Riley analyst Jeff Van Sinderen downgraded Skechers to Neutral from Buy last month. The analyst said at the time that his most recent checks only heighten his level of concern and that he has trouble seeing a catalyst for business reacceleration. At the time, Van Sinderen maintained a $24 price target on Skechers shares. PRICE ACTION: In afternoon trading, Skechers rose 15.1% to $26.22, though shares are down about 13% year-to-date.