Overview
Shares of Crocs moved roughly 2% higher in premarket trading on Monday after Baird elevated the footwear maker to Outperform from Neutral and increased its price target to $150 from $115. The brokerage said it has growing conviction that a recovery in North America and improving trends at HEYDUDE will underpin a return to healthier revenue growth in the second half of 2026.
Operational moves showing early traction
Baird pointed to a string of actions the company implemented since mid-2025 - including cleaning up marketplace inventory, pulling back on promotions and tightening product and marketing execution - as beginning to produce tangible results. Those moves, the brokerage said, have led it to believe sales trends are inflecting positively.
The firm also cited a more upbeat tone from Crocs' management at a recent investor conference as additional support for its improved outlook. Despite a year-to-date price rally of roughly 40%, Baird said the stock's valuation still appears attractive to the firm.
North America as the pivotal market
Central to Baird's thesis is the expectation that North America will be the primary driver of upside. Crocs' North American direct-to-consumer business posted 4.9% growth in the first quarter - its first positive growth quarter since late 2024 - and management highlighted improving wholesale order trends that could sustain a broader recovery later in the year.
HEYDUDE turnaround gaining confidence
Baird described growing confidence that HEYDUDE is moving past its inventory and marketplace reset. The brokerage pointed to stronger direct-to-consumer trends, a more focused product assortment and easing year-over-year comparisons as factors that could help HEYDUDE return to growth in the second half of the year.
Earnings outlook and upside scenarios
On the earnings front, Baird modelled earnings per share of $13.55 for 2026 and $14.90 for 2027. The brokerage added that stronger sales growth combined with continued share repurchases could push earnings materially higher. In a bullish scenario, Baird sees the potential for earnings to approach $17 per share in 2027, which it said could support a substantially higher valuation.
Balancing momentum with risks
While the brokerage's view is more constructive, it acknowledged ongoing risks that could weigh on the company, including consumer spending pressures, tariffs and competition. Nonetheless, Baird highlighted Crocs' improving fundamentals, robust cash generation and shareholder return program as justifications for a more positive stance on the stock.
Key takeaways
- Baird upgraded Crocs to Outperform and raised its price target to $150, noting early evidence of sales inflection.
- North America and HEYDUDE are identified as the primary sources of potential revenue recovery and margin improvement.
- Analyst EPS forecasts: $13.55 for 2026 and $14.90 for 2027, with a bullish pathway to about $17 in 2027 under stronger growth and repurchase assumptions.
Contextual note - This analysis is based on the information and forecasts provided by Baird and management commentary; it reflects the brokerage's current conviction and scenarios rather than guaranteed outcomes.