11:04 AM EDT, 07/29/2024 (MT Newswires) -- Crocs' ( CROX ) "most likely" source of upside in Q2 remains its margins, like in recent quarters, as the company guided the period's EBIT margin conservatively, Wedbush Securities said in a Monday note.

The company expects almost a 400 basis points decline in Q2 EBIT margin and Wedbush is modeling a Q2 beat of about 100 bps. The investment firm also noted that "margins have been a major source of upside relative to guidance in recent years" and Crocs ( CROX ) topped its EBIT margin guidance by 510 bps in Q1.

According to Wedbush, there could also be an upside from the Crocs ( CROX ) brand's performance in North America as the company guided for a flat Q2 growth against market anticipation of a decline into negative because of the recent slowdown in retail sales.

The company's HeyDude brand, however, could post its third straight quarter of double-digit declines and possibly see a guidance cut, Wedbush added.

Wedbush raised its Q2 estimate for Crocs' ( CROX ) earnings per share to $3.76 from $3.53.

Crocs ( CROX ) is set to release its Q2 results on Aug. 1.

Wedbush has an outperform rating and a $170 price target on the company.

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