On Tuesday, Evercore ISI showed confidence in Deckers Outdoor Corporation (NYSE: NYSE:DECK) by raising the price target slightly to $185 from $183, while reaffirming an Outperform rating on the stock. The firm's optimism is based on the positive sentiment surrounding the company, particularly ahead of its second fiscal quarter 2025 earnings report.
The analyst noted that industry checks in various geographies indicate strong growth momentum for Deckers' HOKA and UGG brands, with minimal discounting. This trend is supported by online credit card data for the HOKA brand, which has maintained robust performance. Current trends suggest a year-over-year increase of 26% in direct-to-consumer (DTC) sales for HOKA, surpassing Wall Street’s estimates and marking a shift from the previous two quarters when Deckers' stock experienced pullbacks due to weaker DTC trends.
Further bolstering the company’s outlook, Evercore ISI's extensive checks suggest that Deckers' strategy to transform the UGG brand into a year-round offering is succeeding. The Tasman Slippers, traditionally seen as winter wear, are gaining traction as all-season footwear.
The analyst's commentary highlights the resilience of the HOKA brand and the strategic success of diversifying the UGG brand's product lineup. These factors contribute to the analyst's decision to maintain the Outperform rating, indicating expectations that Deckers Outdoor's stock will perform well relative to the market or its sector in the foreseeable future.
In other recent news, Deckers Outdoor Corporation has been the center of several significant developments. The company reported a strong 22% increase in Q1 FY2025 revenues, primarily due to a 30% surge in revenue from the HOKA brand and a 14% rise from the UGG brand. This led to an upward revision of Deckers' annual profit forecast.
The company also underwent a 6-for-1 stock split, a move endorsed by analysts from Williams Trading and TD Cowen, who adjusted their price targets to reflect the new valuation.
Analysts from various firms have expressed differing views on the company's performance. While UBS maintained a positive outlook, raising the price target to $226 and keeping a Buy rating, Seaport Global Securities downgraded Deckers from "Buy" to "Neutral", expressing concerns about diminishing momentum for the HOKA and UGG brands. Truist Securities increased the stock price target for Deckers to $205.00, expressing confidence in the company's continued strong performance.
Citi maintained a Neutral rating on Deckers Outdoor shares but increased the price target to $170 from $163, reflecting expectations of a strong second-quarter performance, primarily driven by robust sales from the company's Hoka brand.
Furthermore, Guggenheim initiated coverage on Deckers with a neutral rating, citing the company's current valuation and anticipating a 20% increase in sales over the next few years for its HOKA brand.
InvestingPro Insights
Complementing Evercore ISI's optimistic outlook on Deckers Outdoor Corporation (NYSE: DECK), recent data from InvestingPro reveals compelling financial metrics that support the company's strong market position. DECK's revenue growth of 20.3% over the last twelve months, coupled with a robust EBITDA growth of 47.89% during the same period, underscores the company's impressive performance trajectory.
InvestingPro Tips highlight that Deckers has been highly profitable over the last twelve months and is expected to maintain profitability this year. This aligns with the analyst's positive sentiment regarding the company's growth momentum, particularly in its HOKA and UGG brands. Additionally, DECK's strong return over the last year, with a one-year price total return of 95.84%, reflects investor confidence in the company's strategic initiatives, such as transforming UGG into a year-round brand.
It's worth noting that while DECK is trading at a high earnings multiple, it also boasts a low P/E ratio relative to its near-term earnings growth, suggesting potential for further stock appreciation. Investors seeking more comprehensive analysis can access 14 additional InvestingPro Tips for Deckers Outdoor Corporation, providing a deeper understanding of the company's financial health and market position.
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