Street Calls of the Week
Investing.com - BTIG maintained its Neutral rating on Deckers Outdoor (NYSE:DECK), a company with a $15.21 billion market cap and impressive 57.6% gross margin, following fiscal second-quarter results that exceeded expectations primarily due to gross margin benefits from tariff timing.According to InvestingPro analysis, Deckers maintains strong financial health with a "GREAT" overall score, supported by robust cash flows and solid profitability metrics.
The footwear company’s HOKA brand performance was in line with expectations and showed improvement in direct-to-consumer sales, with growth mainly driven by international markets, contributing to the company’s overall revenue growth of 15.49% over the last twelve months. Management indicated HOKA will continue facing similar challenges in the second half of the fiscal year as it did in the first half.
Despite current challenges, BTIG noted that HOKA’s issues have been largely factored into Deckers’ share price, but raised concerns about UGG’s slowing direct-to-consumer performance and softer second-half expectations. This creates a situation where both major brands are experiencing moderating growth and normalizing margins.
The research firm expects fiscal 2026 estimates to remain relatively steady, but anticipates fiscal 2027 estimates will be revised downward following this earnings report. Tariff headwinds are expected to persist well into fiscal 2027.
BTIG observed that while Deckers’ valuation multiple has decreased significantly from previous peaks, it is unlikely to expand again until the company demonstrates improved visibility across its brand portfolio. Currently trading at a P/E ratio of 15.59, InvestingPro analysis suggests the stock is trading below its Fair Value, with additional insights and detailed valuation metrics available in the comprehensive Pro Research Report.
In other recent news, Deckers Outdoor Corporation reported impressive financial results for the second quarter of fiscal year 2026, with earnings per share (EPS) of $1.82, surpassing the forecasted $1.58. The company’s revenue also exceeded expectations, reaching $1.43 billion against the anticipated $1.42 billion. Despite these positive results, several analyst firms have adjusted their price targets for Deckers Outdoor. Needham lowered its price target from $128.00 to $113.00, maintaining a Buy rating, due to concerns following the earnings report. Stifel also reduced its price target from $127 to $117, keeping a Hold rating, citing worries about slowing growth in the HOKA brand. Additionally, Evercore ISI decreased its price target from $110.00 to $90.00, maintaining an "In Line" rating, while noting that the magnitude of earnings beats is diminishing. These developments highlight the mixed sentiment among analysts regarding Deckers Outdoor’s future performance despite its recent earnings success.
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