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Investing.com - Raymond (NSE:RYMD) James has lowered its price target on Deckers Outdoor (NYSE:DECK) to $123.00 from $140.00 while maintaining a Strong Buy rating, citing updated tariff assumptions. According to InvestingPro data, the stock appears undervalued at current levels, with a perfect Piotroski Score of 9 indicating strong financial health. The company’s P/E ratio of 16.5x looks attractive relative to its growth prospects.
The firm raised revenue estimates based on foreign exchange factors but reduced earnings per share projections due to anticipated tariff impacts. Raymond James now models tariffs of 30% for China, 20% for Vietnam, and 20% for other Asian sourcing countries, which prompted the gross margin percentage estimates reduction. Despite these headwinds, DECK maintains a robust gross profit margin of 57.9% and has demonstrated strong revenue growth of 16.3% over the last twelve months.
For the first quarter, Raymond James acknowledges revenue upside may be limited as HOKA continues facing headwinds from its transition to newer versions of Clifton and Bondi models while older versions are phased out. Channel checks indicate ongoing softness for direct-to-consumer sales in the first quarter, though wholesale growth is expected as newer products ramp up.
The firm anticipates modest revenue acceleration for HOKA in the second quarter and second half of fiscal 2026, with the wholesale order book remaining robust. For UGG, Raymond James expects continuation of mid-single-digit growth as planned for the first quarter and fiscal year 2026.
Deckers ended the fourth quarter with $1.9 billion in net cash, which Raymond James believes will support continued share buybacks and EPS accretion, despite the near-term challenges. The company’s strong financial position is reflected in its current ratio of 3.7x and minimal debt-to-equity ratio of 0.11. For deeper insights into DECK’s financial health and growth prospects, including 12 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
In other recent news, Deckers Outdoor has been the focus of several analyst updates and investor concerns. Wells Fargo (NYSE:WFC) adjusted its price target for Deckers Outdoor to $90, citing competitive pressures on the company’s Hoka brand, particularly from Nike (NYSE:NKE)’s renewed focus on performance running. Evercore ISI removed Deckers from its TAP Outperform List while maintaining an In Line rating, highlighting concerns about softness in the direct-to-consumer channel for Hoka. UBS also lowered its price target to $144, pointing to lackluster growth trends in Hoka’s US direct-to-consumer segment. BofA Securities reduced its price target to $114, reflecting a slightly lower forecast for Hoka’s direct-to-consumer sales and adjusting its valuation model. On a more optimistic note, Citi maintained a Buy rating with a $150 price target, anticipating that Deckers will surpass consensus earnings per share estimates, driven by stronger UGG sales and improved gross margin performance. These developments come as the company prepares to release its first-quarter earnings report.
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