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Strong Guidance Lifted Skechers Stock 13.8% on Friday

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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.

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YTD movement 

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%.

Series overview

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.

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