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On Wednesday, CFRA upgraded Deckers Outdoor Corporation (NYSE: NYSE:DECK) stock from a Sell to a Buy rating, setting a price target of $168.00. The research firm’s analysts cited the company’s solid growth trajectory and margin profile as justification for the rating change. This aligns with InvestingPro data showing DECK’s perfect Piotroski Score of 9 and "GREAT" overall financial health rating, suggesting that Deckers Outdoor’s financial performance warrants a valuation above its peers and its historical average.
Deckers Outdoor, known for its HOKA and UGG brands, has experienced significant growth, with HOKA’s top-line growth reported at 24% year-over-year in the third quarter. UGG has also contributed to the company’s success with a 16% year-over-year growth in the same period. This performance comes at a time when Deckers Outdoor’s stock has seen a substantial decline, with InvestingPro data showing a 34% year-to-date drop and the stock trading near its 52-week low of $131.20.
CFRA’s analysis indicates that the recent pullback in stock price presents an attractive entry point for investors. The firm maintains its earnings per share (EPS) estimates for fiscal years 2025 and 2026 at $5.75 and $6.10, respectively. Their 12-month price target of $168 aligns with broader analyst expectations, with InvestingPro showing targets ranging from $120 to $284. The stock currently trades at a P/E ratio of 22x, suggesting potential value given its strong growth profile and financial health metrics.
The company’s financial health is underscored by its $2.2 billion cash reserve and absence of borrowings. Deckers Outdoor has also begun repurchasing shares, leveraging its ample capital to enhance shareholder value.
In summary, CFRA’s upgrade reflects a belief in the company’s ability to continue its growth and outperform within the footwear industry. Deckers Outdoor’s strong brand performance, robust financial position, and recent stock price decline have been identified as key factors making it a top pick for investors according to CFRA.
In other recent news, Deckers Outdoor Corporation reported impressive financial results for the third quarter of fiscal year 2025, surpassing market expectations. The company achieved earnings per share of $3.00, significantly above the forecasted $2.46, and revenue reached $1.83 billion, exceeding the anticipated $1.7 billion. Despite these strong results, the stock price experienced a decline in aftermarket trading. Deckers has raised its full-year revenue guidance to over $4.9 billion, reflecting a 15% growth, and is optimistic about its earnings per share, projecting a range of $5.75 to $5.80.
The HOKA brand continues to expand with new product launches planned, contributing to the company’s robust performance. Citi analyst Paul Lejuez reiterated a Buy rating on Deckers, maintaining a price target of $215.00, following a positive discussion with Deckers’ CFO about the demand for their HOKA and UGG brands. The management expressed confidence in their strategic planning and market positioning, indicating that while there may be short-term fluctuations, the overall trajectory for Deckers remains positive. The company anticipates some short-term variability in HOKA’s wholesale growth due to product launches and store openings but expects sustainable long-term growth.
Citi’s analysis suggests that Deckers might set conservative gross margin expectations for fiscal year 2026, influenced by foreign exchange rates and promotional activities, though margins could surpass initial guidance due to strong demand for full-price products.
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