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On Thursday, Citi analyst Paul Lejuez updated the price target on Deckers Outdoor stock, listed on the New York Stock Exchange (NYSE:DECK), raising it to $215 from the previous target of $178. The firm maintained a Neutral rating on the shares. Lejuez anticipates a significant third-quarter earnings per share (EPS) beat, expecting $2.89 versus the consensus of $2.53. The revision is attributed to robust sales performance from the company's Hoka and UGG brands, along with stronger gross margins. According to InvestingPro data, seven analysts have recently revised their earnings estimates upward, with the company set to report earnings on January 30th.
Deckers Outdoor's success is largely due to a strong holiday season for both UGG and Hoka, contrasting with past quarters where investor concerns about these brands' performance led to caution. The company's impressive performance is reflected in its 71% stock return over the past year and 46% gain in the last six months. This time, indicators suggest solid results, but the high market expectations create a complex situation for investors. Lejuez noted that while the stock is a popular long position leading into the third-quarter results, the company's positive momentum and robust gross margin of 57.1% support the potential for delivering above the high expectations.
Furthermore, Deckers Outdoor's position as a market share winner in the footwear industry could justify multiple expansions. Lejuez compared Deckers' forward fiscal year 2026 enterprise value to EBITDA (EV/EBITDA) multiple of 22.3x to that of ONON, which trades at a forward fiscal year 2025 EV/EBITDA multiple of 30x. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with a P/E ratio of 37.5x and an EV/EBITDA multiple of 27.7x. This comparison underscores Deckers' potential for valuation growth if it meets third-quarter expectations.
Despite the forecast for a very strong quarter, the analyst expressed caution due to the stock's current positioning, suggesting that there is a balanced risk/reward scenario for investors. The market's high anticipation for Deckers' upcoming third-quarter results reflects confidence in the company's brand strength, but also leaves little room for error. For deeper insights into DECK's valuation metrics and financial health, investors can access the comprehensive Pro Research Report available on InvestingPro, which provides detailed analysis of the company's competitive position and growth prospects.
In other recent news, Deckers Outdoor Corporation has been the center of attention due to positive developments. The company has demonstrated impressive revenue growth of 19.25% and a strong gross margin of 57.11%, driven by robust demand for its UGG and HOKA brands. Truist Securities recently raised the price target for Deckers Outdoor's shares to $235, reflecting the continued strong performance of these key brands.
In addition, Needham analysts have increased their price target on Deckers shares to $246, pointing to the company's consistent performance and strong brand momentum. They also raised their earnings per share forecasts for fiscal years 2025 through 2027, indicating further confidence in Deckers' growth potential.
UBS reiterated a Buy rating on Deckers, forecasting a 21% five-year compound annual growth rate in sales for the HOKA brand, which is expected to be a primary driver for the company's projected 16% five-year EPS compound annual growth rate.
Meanwhile, Baird maintained an Outperform rating on Deckers, emphasizing the company's sustainable growth and return on invested capital. The launch of HOKA Bondi 9 shoe and the introduction of new UGG product lines, such as the Lowmel sneaker, are anticipated to boost brand visibility and sales, further strengthening Deckers Outdoor's market position.
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