Piper Jaffray Upgrades Crocs (CROX) to Overweight

August 7, 2009 7:38 AM EDT

Piper Jaffray upgrades Crocs (Nasdaq: CROX) from Neutral to Overweight, following better than expected results after the close. The firm said global demand drives the path to profit in 2010. The firm also raised their price target from $3 to $7.50.

Piper expects share price appreciation to accompany consistent fundamental improvement & profitability potential in next 12 months.

Catlysts cited for the upgraded include:

• 1) Strength in consumer demand (on lowered expectations) is encouraging; brand equity remains high; visibility limited but improving.
  
• 2) Wholesale/retail, U.S./int'l, and product mix all contributing to better margin profile; mgmt reiterated its med-term mid-teens op margin target.
  
• 3) International markets represent 60%-plus of revenues; Asia strength a key driver.
  
• 4) Direct to consumer platform mitigates risk tied to domestic wholesale order volatility; DTC exceeds 50% of U.S. revenues; growth of 20%-plus is reasonable.
  
• 5) Company is bank debt free; $60M in cash ($0.70/share); receivables collection much improved and inventory levels nearer to sales needs; 2.2M in carryover inventory remains of 8M excess.

Shares of CROX jumped 30% after-hours following results.

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