Skechers’ Ratings Slide after Recent Weak Results



Recent analyst actions on Skechers

Skechers (SKX) has reported disappointing results in the last two quarters, resulting in a strong analyst penalty. At least seven Wall Street analysts have lowered their ratings on SKX stock since the company’s first-quarter results in April.

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Recommendation changes after Q1 and Q2 results

Wedbush Securities downgraded Skechers (SKX) stock to “neutral” from “outperform” after its first-quarter results on April 20. The analysts noted the company’s rising costs and inefficiencies within its global supply chain. 

The stock was impacted again after Skechers’ second-quarter results when it didn’t meet its bottom-line expectations. Susquehanna lowered SKX stock from “positive” to “neutral” on July 20. On the same day, Wells Fargo also downgraded SKX from “outperform” to “market perform.” 

Analysts seemed concerned about Skechers’ deteriorating margins and the uncertainty surrounding its earnings. However, the company received an upgrade by Standpoint Research from “hold” to “buy” on the same day.

On July 27, Argus downgraded Skechers from “buy” to “hold,” citing weak second-quarter earnings and a subdued revenue outlook.

Recent downgrades

Cowen & Company downgraded Skechers (SKX) from “outperform” to “market perform” in September. The downgrade was based on Skechers’ slowing sales, rising inventory pressure, and ongoing currency headwinds. Cowen analysts noted that Skechers’ inventories grew ~23.0% during the second quarter, while its inventory turnover was at its lowest level in ten years.

October brought another downgrade as Citigroup downgraded Skechers from “buy” to “neutral,” as its analyst saw a limited near-term upside for the company. The Citi analyst also lowered the company’s EPS for fiscal 2018 and fiscal 2019 on expectations of higher SG&A[1. selling, general, and administrative] expenses as Skechers continues its investment in international markets.

In the next article, we’ll look at Wall Street’s broad view of Skechers stock.


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