Street Calls of the Week
Investing.com - Telsey Advisory Group lowered its price target on Deckers Outdoor (NYSE:DECK) to $105.00 from $120.00 on Friday, while maintaining a Market Perform rating on the footwear company’s stock. According to InvestingPro data, the company maintains strong financial health with a current ratio of 2.94 and minimal debt, while trading at an attractive PEG ratio of 0.62.
The price target reduction follows Deckers’ fiscal second quarter results, which showed better-than-expected sales and gross margin performance, though both HOKA and UGG brands experienced sequential deceleration. UGG outperformed market expectations while HOKA met projections. The company maintains a robust gross margin of 57.63% and has achieved impressive revenue growth of 15.49% over the last twelve months.
Deckers’ direct-to-consumer (DTC) comparable sales declined during the quarter, with overall DTC sales falling for just the second time in five and a half years. Domestic sales contracted for the third consecutive quarter, highlighting challenges in the U.S. market.
The company moderated its total unmitigated tariff impact on cost of goods sold to $150 million from a previous estimate of $185 million. Management now expects to offset $75-95 million through price increases and cost-sharing with factory partners, up from a previous $75 million offset target.
Deckers has returned to issuing annual guidance, though its full-year sales forecast came in below expectations. While the fiscal 2026 earnings per share outlook brackets prior consensus estimates, Telsey noted this implies softer second-half performance given the approximately $0.30 earnings beat in the fiscal second quarter.
In other recent news, Deckers Outdoor Corporation reported its second-quarter fiscal 2026 earnings, surpassing analyst expectations with an earnings per share of $1.82, compared to the anticipated $1.58. Revenue also exceeded forecasts, reaching $1.43 billion against the expected $1.42 billion. Despite these strong financial results, Evercore ISI lowered its price target for Deckers Outdoor to $90.00, citing concerns about slowing growth, but maintained an "In Line" rating. Similarly, Stifel reduced its price target to $117 due to concerns about the HOKA brand’s growth, although it kept a Hold rating. Needham also adjusted its price target downward to $113, while maintaining a Buy rating, following the earnings report. BTIG maintained a Neutral rating on the stock, noting mixed brand performances, with HOKA showing improvement in direct-to-consumer sales but facing ongoing challenges. These developments reflect a cautious outlook from analysts despite Deckers Outdoor’s better-than-expected quarterly performance.
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