On Thursday, KeyBanc Capital Markets increased its price target on Deckers Outdoor Corporation (NYSE:DECK) shares from $213.00 to $230.00, while retaining an Overweight rating. The firm’s analysts highlighted Deckers’ strong performance and growth potential, particularly in its HOKA and UGG brands. The optimism appears well-founded, as InvestingPro data shows the company achieved an impressive 71% return over the past year, with revenue growing 19.25% and maintaining a healthy 57.11% gross margin.
Deckers’ leading brands, HOKA and UGG, are driving the company’s positive outlook. HOKA’s focus on developing its product pipeline and establishing substantial franchises is expected to contribute to long-term growth. Analysts anticipate that new versions of the Clifton and Bondi shoe lines could lead to over 30% growth for HOKA within the year. InvestingPro subscribers can access 15+ additional exclusive insights about Deckers’ financial health, which has earned a "GREAT" overall rating from analysts.
UGG’s efforts to diversify its product offerings beyond traditional cold-weather categories are also seen as a success, contributing to the brand’s year-round momentum. The company’s strategy appears to be effective, with the potential to exceed current high expectations if demand persists throughout the year. Seven analysts have recently revised their earnings expectations upward, reflecting growing confidence in the company’s execution.
Deckers is updating two of its most popular HOKA shoe franchises, the Bondi and Clifton, which are anticipated to bolster the company’s performance in the first half of 2025. The new models will feature advanced technology and a $5 price increase, reflecting HOKA’s strong demand and low markdown levels. HOKA is also aiming to attract international customers, particularly at the approximately $200 price point, and is observing demand in China for products priced between $100 and $120.
The Bondi 9 was released last week, leading to the Bondi 8 being discounted by retailers and removed from HOKA’s website as the company phases out the older model. A similar strategy is expected for the Clifton 9, which is set to launch in April 2025.
In other recent news, Deckers Outdoor Corporation has seen several significant developments. Citi analyst Paul Lejuez raised the price target for Deckers Outdoor to $215, maintaining a neutral stance, due to robust sales performance from the company’s Hoka and UGG brands. Truist Securities also lifted the price target for Deckers Outdoor to $235, reflecting strong demand for the UGG and HOKA brands. Needham analysts echoed this positive sentiment, increasing their price target on Deckers shares to $246, citing the company’s consistent performance and strong brand momentum.
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. Baird maintained an Outperform rating on Deckers, emphasizing the company’s sustainable growth and return on invested capital.
These recent developments highlight the positive momentum for Deckers Outdoor, marked by strong earnings and revenue growth as well as positive analyst projections. However, investors should be aware of the potential risks and rewards in the context of high market expectations.
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