On Friday, KeyBanc Capital Markets adjusted its outlook on shares of Deckers Outdoor Corporation (NYSE:DECK), raising the price target to $213 from $190 while maintaining an Overweight rating on the stock. This adjustment follows the firm's engagement with Deckers Outdoor and Crocs (NASDAQ:CROX), Inc. management teams during the FFANY Market Week.
According to InvestingPro data, Crocs demonstrates strong financial health with a "GREAT" overall rating and trades at an attractive P/E ratio of 7.9x.
The analyst from KeyBanc reported a positive impression from the showcases, highlighting Deckers Outdoor's focus on distribution management, customer acquisition, and innovation as key drivers. The company's HOKA brand is generating excitement with the upcoming launch of new models for its Bondi and Clifton lines, slated for release in January 2025 and April 2025, respectively.
These new offerings were previewed during an event hosted by Deckers Outdoor. For deeper insights into both companies' financials and growth prospects, InvestingPro subscribers can access comprehensive research reports covering 1,400+ US stocks.
In addition to developments in the HOKA brand, the analyst noted the targeted consumer segments for the company's UGG brand. Deckers Outdoor is prioritizing the re-imagination of iconic products, which has provided increased clarity on the company's direction and contributed to recent price momentum. As a result, KeyBanc has increased the price target for Deckers Outdoor shares.
The analyst also touched upon the strategies discussed by Crocs management for the HEYDUDE brand, including the expansion of new product silhouettes beyond the traditional Wally/Wendy designs. Crocs' brand strategy remains consistent, with ongoing innovation in product colors, prints, and wear occasions, supported by selective brand marketing partnerships.
Overall, the raised price target reflects KeyBanc's confidence in Deckers Outdoor's strategic initiatives and anticipated product launches, which are expected to drive the company's growth.
Meanwhile, InvestingPro analysis indicates Crocs is currently trading below its Fair Value, with impressive metrics including a 57% return on equity and strong free cash flow generation. The stock has experienced a significant 26% decline over the past six months, potentially presenting an opportunity for value investors.
In other recent news, Crocs, Inc. has made significant financial strides by expanding its senior revolving credit facility to $1 billion, a $250 million increase. This amendment, known as the Sixth Amendment, also provides the option for Crocs to further increase its total commitments by up to an additional $400 million under certain conditions.
On the earnings front, Crocs reported a modest 2% year-over-year increase in its third quarter 2024 earnings, with consolidated revenues reaching $1.1 billion. Despite a dip in revenue for its subsidiary brand, HEYDUDE, the company's direct-to-consumer sales saw a 5% rise, and the Crocs brand enjoyed an 8% revenue increase.
In recent analyst notes, Needham initiated coverage on Crocs with a Buy rating, highlighting the company's international brand growth and strong free cash flow. However, Loop Capital downgraded Crocs from Buy to Hold, reducing the price target to $110 due to concerns over the current sales trajectory and challenges faced by HEYDUDE.
Amid these developments, Crocs has adjusted its full-year revenue growth guidance for 2024 to approximately 3%. The company continues to invest in talent with the hiring of Terence Reilly as the new Hey Dude president and the appointment of Steven Smith as Head of Creative Innovation.
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