Surge in stock price
Skechers (SKX) stock surged 13.8% on October 19 in reaction to the company’s better-than-expected outlook for the fourth quarter. Skechers announced its third-quarter results after the market closed on October 18. The company’s earnings topped analysts’ consensus estimate, but its sales growth slowed and missed expectations.
Even after the strong rise in its stock price on October 19, Skechers stock is still down 21.5% YTD (year-to-date), lagging the S&P 500 Index, which has risen 3.5% YTD. Skechers’ peers Nike (NKE) and Under Armour (UAA) were up 18.6% and 26.1%, respectively, YTD as of October 19.
Skechers stock took a major hit following a disappointing performance in the first two quarters of 2018. The stock fell 27% on April 20 following its first-quarter results and 21% on July 20 in reaction to its second-quarter results.
The company’s stock price movement was also adversely impacted by analysts’ rating downgrades and unfavorable revisions to its 12-month price target. In September, Skechers stock was downgraded by Cowen and Company to a “market perform” from an “outperform.” On October 2, Citigroup lowered its rating for Skechers stock to a “neutral” from a “buy.”
Skechers offers an extensive range of footwear in the United States and more than 170 countries through department and specialty stores, digital channels, and 2,802 company-owned and third-party retail stores. As of October 19, Skechers stock was rated as a “hold” by seven out of 13 analysts (or 54%). Six analysts had “buy” recommendations on the stock, while none had “sell” recommendations. As of October 19, the 12-month price target for Skechers stock was $32.55, implying an upside potential of 10%.
Skechers’ international business continued to impress in the third quarter while weakness persisted in its domestic wholesale business. In this series on Skechers’ third-quarter results, we’ll discuss in detail the company’s earnings, sales, and margin performances. In the next article, we’ll take a closer look at Skechers’ third-quarter sales.