Skechers shares soar after insider buying from CEO
Shares of Skechers (SKX) gained nearly 16 percent Thursday after the company's CEO, Robert Greenberg, disclosed that he purchased 500,000 shares on Wednesday. In addition, Buckingham Research upgraded Skechers to "buy" from "neutral."
In a note shared with investors Thursday morning, Buckingham analyst Scott Krasik raised his price target from $21 per share to $31 per share after viewing products Skechers debuted at the Fashion Footwear Association of New York trade show. His analysis was further bolstered by Greenberg's decision to purchase $11 million worth of shares, the CEO's first buy in 15 years.
The lifestyle and footwear company disappointed investors with its third quarter earnings report. However, Krasik believes Skechers is one quarter away from a potential sales inflection.
"While fundamentals will likely remain under pressure for the next one to two quarters, as we indicated in recent research, Skechers' ability to reduce inventory after 2016 diminishes the risk of another major negative EPS revision in the near-term," Krasik wrote in the note. "At current levels, we believe the risk/reward is extremely favorable."
Sam Poser, an analyst for Susquehanna Financial Group, told CNBC that despite Nike (NKE) and Adidas (XETRA:ADS-DE) dominating the athleisure and shoe market for millennial consumers, Skechers is still doing well because it is successfully marketing towards other consumers.
"They do a ton of business in novelty kids shoes, brown comfort shoes, work category, women's active, etc. and they're doing well," Poser said. "You've got to do what you do well. I mean you could argue that Nike does a lousy job getting 55-year-old men wanting their comfort shoes. But should they be working on that? Not necessarily."
Poser shared that Susquehanna also raised its price target for Skechers from $27 per share to $30 per share and rated the stock as "buy."
Skechers closed on Thursday at $26.40 a share.
— CNBC's Gina Francolla contributed to this report.
Disclosure: SFG is a market maker in the securities of SKX.
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