Shares of Skechers plunged 17 percent Friday after it was downgraded to "neutral" from "buy" at Citi, following a disappointing earnings report.
The company posted earnings of 42 cents a share on revenue of $942 million on Thursday. Analysts had expected earnings of 46 cents a share on $954 million in revenue, according to a Thomson Reuters consensus estimate.
Skechers also issued disappointing guidance and said it now expects fourth-quarter sales between $710 million and $735 million. Wall Street had previously projected $800 million in quarterly revenue, according to Thomson Reuters.
Citi lowered its price target to $21 from $33, citing a "lack of visibility" which "could result in further volatility over the next year while keeping valuation in a depressed range until the company returns to a more predictable growth trajectory."
Citi said, however, that it still believes Skechers "has significant long-term opportunities for global growth, supported by the company's diversification across product categories [and] international markets."
It's also possible that "downside risks are priced in," Citi said in its research note. With Friday's decline, the stock has fallen about 37 percent so far this year.
Disclosure: Citigroup Global Markets or its affiliates has received compensation for investment banking services provided within the past 12 months from Skechers. The firm or its affiliates expects to receive or intends to seek, within the next three months, compensation for investment banking services from the company. Citigroup currently has or had within the past 12 months Skechers as an investment banking client.