Wedbush Morgan Says Don't Try On Crocs (CROX)--Yet
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Wedbush Morgan published a lukewarm note on Crocs (Nasdaq: CROX) today. Wedbush met with Crocs management and feels a turnaround of the company will not occur anytime soon. Wedbush does not believe Crocs will turn a profit until at least 2011.
Wedbush did note Crocs' management is still trying to get a handle on its deteriorating business. It appears that management is still seeking a workable retail model, especially at its U.S. concept stores, and is working to reduce inventory and stabilize sales.
The research team at Wedbush believe gross margins should recover as inventory is cleared, but future gross margins are likely to top out in the mid-40% range.
Wedbush Morgan reduced its FY'09 EPS estimate from ($0.78) to ($0.89) because Crocs' business is worse than they previously believed.
Near term, Wedbush does not see any significant upside potential in shares of Crocs.
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