Crocs, Inc. (NASDAQ:CROX) has received a higher price target from Bank of America ahead of its second-quarter earnings report, with the firm reiterating its ‘Buy’ rating and raising its target to $160 from $145 on expectations that sustained direct-to-consumer (DTC) growth in North America could support further valuation expansion.
The firm increased its valuation multiple to 11 times its 2027 earnings estimate from 10 times previously, writing that additional evidence of durable North American DTC growth could drive further multiple expansion.
This price target implies upside from current levels of about $132.
Bank of America forecasts Q2 earnings per share of $4.24, broadly in line with Visible Alpha consensus estimates.
The firm sees the potential for upside in the quarter, supported by continued DTC momentum and an improving setup for the second half of the year as the company laps strategic actions taken last year that weighed on sales.
The analysts expect total second-quarter sales to decline 1% year over year, with growth in the Crocs brand's DTC business offset by weaker wholesale sales and continued declines at Heydude. They forecast North American DTC sales to rise 1%, below the Street's expectation of 2%, but noted that demand for newer products, including sandals, could support stronger results.
Bank of America highlighted continued consumer interest in new product launches, pointing to popular sandal styles such as the Miami Flip, where it has observed products selling out even after restocking.
On margins, the firm expects gross margin to decline 150 basis points year over year, in line with company guidance that incorporates tariff-related headwinds. While lower tariff rates and the potential for refunds could provide some relief, the analysts wrote that a greater contribution from newer products and sales channels with lower gross margins could offset those benefits.
Looking beyond the second quarter, Bank of America expects a more favorable operating environment in the second half of the year, supported by upcoming product launches, including the Echo 2 and Mellow 2 collections, and easier comparisons following last year's reductions in promotional activity and wholesale shipments.
The firm also sees the possibility that improving demand for new products could eventually benefit North American wholesale sales, although its current forecasts continue to assume negative wholesale trends through the remainder of 2026.