Skechers USA (SKX) is "on track" to reach $10 billion in revenue by 2026, allowing it to secure its position among the world's biggest footwear companies, UBS Securities said in a note Friday.
The brokerage forecasts a 16% earnings per share compound annual growth rate over the next five years for Skechers, which should drive "multiple positive" earnings surprises and potential price-to-earnings, or P/E, expansion.
"Our view is the market significantly underappreciates the strength of the Skechers brand name and the company's revenue growth potential," UBS said, adding that insights from its 10th annual global athletic wear survey reinforce this view.
Survey results show Skechers' brand strength, with improved consumer perceptions of innovation, quality, and fashion. The brand ranks 5th in Net Promoter Score, second in customer loyalty after Nike (NKE), and has seen a rise in purchase intention for athletic footwear, UBS said.
UBS has a buy rating on Skechers with a 12-month price target of $92.
Shares of Skechers were up more than 4% in recent Friday trading.
Price: 70.11, Change: +2.82, Percent Change: +4.19
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