Williams Trading moved to downgrade Crocs (NASDAQ:CROX) to a Sell rating from Hold on Tuesday, even as it increased its price target to $84 from $75. The change comes while Crocs shares were trading at $99.92. Data from InvestingPro cited alongside the note indicates the stock appears undervalued relative to its Fair Value estimate.
The analyst team pointed to weakening demand in the U.S. for both Crocs-branded product and the HEYDUDE label. According to Williams Tradings channel checks, multi-branded retailers - both large and small - are planning fiscal 2026 Crocs businesses lower by high single digits to mid-teens. The HEYDUDE business is slated down mid-teens, and Williams Trading reports no signs that those retailer plans are likely to improve during the second half of fiscal 2026.
To counteract softer wholesale orders, Williams Trading observed that Crocs appears to be accelerating brick-and-mortar expansion aimed at growing its global direct-to-consumer (DTC) footprint. The firm noted this push into stores is being used to offset weakness in the wholesale channel, but added that increasing store counts does not necessarily restore profitable top-line momentum.
Williams Trading also expects the company will continue and likely increase its share repurchase activity. The firm acknowledged that buybacks can support earnings per share metrics, and said fiscal 2026 EPS results may fall within guidance ranges primarily as a result of reduced share count. However, the analyst warned that repurchases do not address the underlying revenue and margin pressures the firm sees developing.
InvestingPro data referenced in the note shows management has been an active buyer of shares and that analysts forecast fiscal 2026 EPS of $13.47. The company retains a "GOOD" overall financial health score in that dataset.
Williams Trading's expectation that fiscal 2026 revenue and margin outcomes will likely land below guidance stands in contrast to other recent developments for Crocs. The company reported a strong fourth quarter for fiscal 2025, with EPS of $2.29 beating the Wall Street consensus of $1.91, and revenue of $958 million exceeding the $916.09 million forecast.
Those quarterly results and a robust outlook for fiscal 2026 prompted divergent responses from the sell-side. Needham raised its price target from $100 to $118 and kept a Buy rating. Stifel, meanwhile, maintained a Hold rating with a $90 price target despite the companys confident fiscal 2026 guidance.
Crocs has provided outlooks for fiscal 2026 that include adjusted EPS between $12.88 and $13.35, which would be above analysts' estimates of $11.89. Management expects revenue next year to range from a slight decline to a marginal increase, a view that Williams Trading notes is nonetheless vulnerable given the retailer order reductions it has observed. These announcements coincided with roughly a 20% jump in Crocs stock following the companys disclosures.
Context and implications
The Williams Trading downgrade underscores a divergence between company-reported results and underlying order trends identified in the U.S. wholesale channel. While buybacks can support per-share metrics, the analyst note highlights that they do not substitute for organic top-line improvement or margin expansion when retailer demand weakens.