div style=”text-align: justify;”Piper Jaffray is upgradingspan style=”font-weight: bold;” Crocs (NASDAQ:CROX) /spanto Overweight from Neutral with a $7.50 target price (prev $3)br /br /Piper expect share price appreciation to accompany consistent fundamental improvement amp; profitability potential in next 12 months. Q2 results outpaced estimates and guidance; clear signals that company is achieving early turnaround success.br /br /1) Strength in consumer demand (on lowered expectations) is encouraging; brand equity remains high; visibility limited but improving.br /br /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.br /br /3) International markets represent 60%-plus of revenues; Asia strength a key driver.br /br /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.br /br /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.br /br /span style=”font-weight: bold;”Confidence in direction of sales and margin; /spanvisibility into specific quarterly results remains limited: Firm notes they are upgrading to Overweight based on the premise that key concerns surrounding the company’s fundamental health have been alleviated and early signs of a successful turnaround exist. It’s much too early to assume peak sales and margins are achievable but we do believe steps have been taken to establish a reasonable trajectory toward achieving profitability in 2010.br /br /span style=”font-weight: bold;”Raising estimates; model evolving toward direct to consumer with higher margin profile: /spanThey are raising their FY09 amp; FY10 estimates, predicated on a higher degree of confidence in sales prospects and ongoing efforts to right size and refocus the operating infrastructure toward a rapidly growing direct to consumer model. If we assume that retail amp; Internet sales represent 40%-50% of total and grow at a rate of 20%, the legacy wholesale business could show little or no growth and the company could still achieve 5%-10% top-line growth in 2010. Firm’s revised model assumes operating margin in the mid-single digits (6%), generating earnings of $0.30.br /br /span style=”color: rgb(255, 0, 0);”Notablecalls:/span It’s quite obvious the results were a surprise to most market participants (especially the short kind).br /br /span style=”font-weight: bold;”I think the stock can reach $6+ level in the very n-t. /spanbr /br //divdiv class=”blogger-post-footer”img width=’1′ height=’1′ src=’https://blogger.googleusercontent.com/tracker/29297569-334515648573230219?l=notablecalls.blogspot.com’//div

Last 5 posts by Notable Calls

• Petroquest Energy (NYSE:PQ): Compelling Valuation with Near-Term Catalysts; Upgrading to Overweight - J.P. Morgan - October 29th, 2009
• 15% correction coming in SP500? - October 21st, 2009
• Boeing (NYSE:BA): Downgraded to Underweight at Morgan Stanley, target to $43 - October 20th, 2009
• Par Pharmaceuticals (NYSE:PRX): Upgraded to Overweight at Barclays; target raised to $30 - October 15th, 2009
• Wyndham Worldwide (NYSE:WYN): Upgraded to Buy at Goldman Sachs; $26 target established - October 7th, 2009