Crocs stox schlocks ignored as shares drop

Aaron Pressman

Crocs, maker of popular and brightly colored plastic shoes, had a rip-roaring IPO last month run by underwriters Piper Jaffray and Thomas Weisel. Priced at $21, already 50% above the range Crocs had filed with the SEC, the shares (symbol: CROX) opened at $30 and hit $32.50 on the first day. Crocs had demonstrated plenty of enticing growth -- it's revenue in the first nine months of 2005 was almost ten times higher than in 2004 -- but seemed more than a tad overvalued at a market cap of ten times that fast-growing revenue. A couple of weeks ago, the company reported its fourth quarter results, again showing impressive growth with sales up more than sixfold.

Today the stock received two "buy" rating from Wall Street analysts. Super news? Not exactly. Analysts at Piper Jaffray and Thomas Weisel, the underwriting firms, were the ones feeling bullish. An analyst at Cowen & Co., however, called the stock a "hold" based on the previously mentioned valuation concerns and the fact that the company hasn't been public for very long making it difficult to forecast results for the rest of the year. End result? Shares down 5% today and almost one-third from the IPO opening trade price. I guess even if new regulations can't take tainted stock analyst reports out of the market, the market can take the analysts out of consideration.

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