Investing.com -- Shares of Crocs rose about 2% in premarket trading on Monday after Baird upgraded the footwear maker to Outperform from Neutral and raised its price target to $150 from $115, citing growing confidence that a recovery in North America and improving trends at the HEYDUDE brand will drive a return to healthier revenue growth in the second half of 2026.

Baird said actions taken since mid-2025 to clean up marketplace inventory, reduce promotions and improve product and marketing execution are beginning to yield results, giving the firm greater conviction that sales trends are inflecting positively. The brokerage also pointed to a more upbeat tone from management at a recent investor conference and said the stock’s valuation remains attractive despite a roughly 40% year-to-date gain.

The analyst sees North America as the key driver of future upside. Crocs’ North American direct-to-consumer business grew 4.9% in the first quarter, its first positive growth quarter since late 2024, while management highlighted improving wholesale order trends that could support a broader recovery later this year.

Baird also expressed increasing confidence in a turnaround at HEYDUDE, saying the brand appears to be moving beyond its inventory and marketplace reset. Stronger direct-to-consumer trends, a more focused product assortment and easier comparisons could help the business return to growth in the second half of the year.

The brokerage forecasts earnings per share of $13.55 in 2026 and $14.90 in 2027 but said stronger sales growth and continued share repurchases could push earnings materially higher. In a bullish scenario, Baird sees potential for earnings to approach $17 per share in 2027, supporting a significantly higher valuation.

Despite ongoing risks from consumer spending pressures, tariffs and competition, Baird said Crocs’ improving fundamentals, strong cash generation and shareholder returns justify a more positive stance on the stock.