On Friday, TD Cowen maintained its Outperform rating on Deckers Outdoor Corporation (NYSE:DECK) and increased the price target to $898 from the previous $808. The firm's analysts highlighted Deckers' exceptional performance across various sales channels, geographic regions, and product categories. They noted the company's year-over-year sales growth of 16%, driven by a 15% increase in UGG brand sales and a 20% rise in HOKA brand sales.
The third-quarter incremental EBIT margin was reported at 58%, underscoring Deckers' industry-leading execution and strategic shifts toward direct-to-consumer (DTC) sales channels. TD Cowen also pointed out that Deckers' market capitalization is nearing $20 billion, which could position the company for potential inclusion in the S&P 500 Index.
In light of these factors, TD Cowen has adjusted its earnings per share (EPS) estimates for fiscal years 2024 and 2025 to $27.45 and $30.95, respectively. These figures surpass the consensus estimates of $24.18 for FY24 and $27.77 for FY25. The revised price target of $898 is based on 29 times the projected FY24 earnings per share and 21 times the enterprise value to EBITDA ratio.
Deckers' robust performance and the anticipated growth trajectory have been recognized by TD Cowen, reflecting confidence in the company's continued success in the footwear industry. The raised price target suggests that the firm sees substantial value in Deckers' business model and market position.
InvestingPro Insights
Deckers Outdoor Corporation's (NYSE:DECK) financial health and stock performance continue to draw attention from analysts and investors alike. With a market capitalization of $22.56 billion, Deckers is demonstrating strong growth potential, particularly with its revenue growth in the last twelve months as of Q2 2024 standing at 14.38%, and an even more impressive quarterly revenue growth of 24.7% for the same period.
InvestingPro Tips reveal additional strengths that could further justify the optimism surrounding Deckers. The company holds more cash than debt on its balance sheet, providing financial stability and flexibility. Furthermore, 9 analysts have revised their earnings upwards for the upcoming period, signaling positive sentiment about Deckers' future profitability.
The P/E ratio of Deckers, at 37.57, might appear high; however, when considering the near-term earnings growth, the PEG ratio stands at 0.79, indicating that the stock could be trading at a discount relative to its growth rate. This aligns with the view that Deckers is positioned for continued success, especially given its strategic focus on direct-to-consumer sales channels and strong brand performances.
For those interested in deeper investment insights, InvestingPro offers additional tips on Deckers. Currently, there are 19 more InvestingPro Tips available, which can be accessed with a subscription. The InvestingPro subscription is now on a special New Year sale, with discounts of up to 50%. To take advantage of this offer, use coupon code SFY24 for an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 for an additional 10% off a 1-year subscription.
Deckers' strong financial metrics and the positive outlook from analysts suggest that the company's upward trajectory in the footwear industry is set to continue, potentially offering lucrative opportunities for investors.
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