The Proficient Investor

Shares of Quiksilver (ZQK) rose 8% today after announcing their 2007 Q2 loss was in line with Wall Street estimates.  For the quarter ending April 30, revenue increased increased 17% to $603.8 million from $516.9 million in the same period last year.  Net loss for the second quarter 2007 was $4.8 million compared to net income of $3.7 million the year before.  This represents a lost per share of $(.04) compared to a $.03 gain last year for the same period.

Since these estimates were in line with analysts figures, the stock gained on the day to close up 8% at $14.33.

Quiksilver is still looking at 40% growth YoY and only trading at 23 times earnings.  If you consider those figures, the stock should be trading in the 40s based on growth and revenue projections for next year.  The fact that the loss was seen as inline turned out to be good news for investors today.

Quiksilver is an apparel manufacturer of snowboarding, skating, surfing and skiing clothing.  Their demographic includes the 18-25 crowd and last year after making a deal with Rossignol, I see this as the break-out year for Quiksilver.

On Monday, June 4th Robert Baird downgraded the stock from outperform to neutral and setting a $15 target.  That isn’t that far away from here and as I’ve said before, when an analyst talks about a stock like this and sets a target that isn’t even a stretch it’s because they are already too late to the game.  The 52 week high of $16 was set in January.

By the end of the year I think Quiksilver climbs out of this funk and hits $20, especially nearing the end of the summer and beginning of fall.  The trend here is still upward despite the analyst downgrade and the in-line loss today.  My recommendation: Buy.

At the time of publication, I was long ZQK