Wall Street steps into Skechers after CEO buys shares

The outside of a Skechers shoe store is seen at Times Square in New York May 2, 2014. REUTERS/Shannon Stapleton

SAN FRANCISCO (Reuters) - Skechers USA's stock SKX.N was on track for its best day in over two years on Thursday after the shoe seller's chief executive bought $11 million worth of the beleaguered shares and a brokerage recommended it after viewing new products at a trade show.

Skechers sprang to life and jumped 15 percent to $26.15 after the company revealed in a filing late the day before that founder and CEO Robert Greenberg recently purchased 500,000 shares.

The retailer has enjoyed double-digit annual revenue growth since 2013 as it moves beyond casual shoes to take on Nike NKE.N and other sports footwear sellers. But with that growth cooling, investors in the past year had lost their appetite for Skechers's stock, leaving it down 60 percent from its 2015 record high.

Buckingham Research Group analyst Scott Krasik raised his rating on Skechers to “buy” from “neutral”, pointing to Greenberg’s stock purchase as well as new lines of shoes unveiled at a footwear trade show this week.

“(Skechers) has identified the ‘next thing’ in women’s comfort as it transitions from GoWalk to You by Skechers which appears inspired by key styles from Adidas and Nike,” Krasik wrote in a research note.

After attending the same trade show in New York, Citi on Wednesday raised its price target on Skechers to $24 from $21, maintaining its “neutral” rating. Citi analyst Corinna Van der Ghinst wrote in a client note that Greenberg’s stock purchase suggested he is confident in a plan to build out Skechers’ Bobs shoe line to compete in the $40 range.

The selloff in Skechers’ stock this year before Thursday’s jump had left its valuation at 13 times expected earnings, cheap compared to its five-year average of 27.

Analysts on average expect the Manhattan Beach, California company to report flat revenue in the December quarter, its worst quarterly revenue performance since mid-2012, according to Thomson Reuters data. Its adjusted earnings per share are seen falling 45 percent in the same period.

Reporting by Noel Randewich; Editing by Meredith Mazzilli