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Investing.com - Bernstein SocGen Group has lowered its price target on Deckers Outdoor (NYSE:DECK) to $85.00 from $100.00 while maintaining an Underperform rating on the stock. According to InvestingPro data, the stock currently trades at a P/E ratio of 15.6x with a PEG ratio of 0.62, suggesting potential undervaluation relative to its growth prospects.
The price target reduction follows what the firm described as a "solid Q2 print" that was overshadowed by weak second-half guidance and cautious management commentary. Bernstein noted that both of Deckers’ key brands, Hoka and Ugg, are experiencing shrinking sales in the U.S. market alongside margin compression. Despite these concerns, InvestingPro data shows the company maintains strong fundamentals with a gross profit margin of 57.6% and robust return on equity of 44%.
Despite Hoka achieving 11% growth in the second quarter with direct-to-consumer sales up 8%, and Ugg posting stronger-than-expected 10% growth compared to the Street’s 7% estimate, the company’s second-half guidance fell below analyst expectations for both brands’ sales and margins. InvestingPro analysis reveals the company has maintained impressive revenue growth with a 5-year CAGR of 19% and holds more cash than debt on its balance sheet, suggesting financial stability despite near-term headwinds.
Bernstein expressed concern about Hoka’s strategy of focusing heavily on maximum cushion running shoes, describing the category as "already saturated and highly competitive." The firm noted that almost all of Hoka’s upcoming Spring 2026 running launches will be in the maximum cushion category, while the non-running assortment remains limited.
The research firm also highlighted that Deckers’ U.S. sales continue to decline, predicting that the company’s sales mix will shift further toward international markets as Hoka loses market share in the maximum cushion running segment domestically.
In other recent news, Deckers Outdoor reported fiscal second-quarter results that exceeded expectations, with revenue growth of 9% compared to the anticipated 8%. Earnings per share came in at $1.82, surpassing the consensus estimate of $1.58. Despite these positive figures, several firms have adjusted their price targets for the company. Telsey Advisory Group reduced its target to $105, citing sequential deceleration in both the HOKA and UGG brands, though UGG outperformed market expectations. Needham also lowered its price target to $113, expressing concerns over UGG’s performance despite maintaining a Buy rating. Stifel adjusted its target to $117 due to worries about slowing growth in the HOKA brand, while Evercore ISI set a new target of $90, noting diminishing earnings beats. BTIG maintained a Neutral rating, highlighting mixed brand performance and challenges ahead for HOKA in the fiscal year’s second half.
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