Stifel maintains hold on Deckers stock with $127 price target

On Friday, Stifel analysts maintained a Hold rating on Deckers Outdoor Corporation (NYSE: NYSE:DECK) with a consistent price target of $127.00. The analysts highlighted that the company’s fourth fiscal quarter of 2025 saw a significant increase in UGG brand revenue, which was $60 million higher than Stifel’s estimates. The company, which InvestingPro data shows maintains a strong gross profit margin of 57.9%, achieved margins 370 basis points above expectations, coupled with effective expense control and a favorable tax rate. With a perfect Piotroski Score of 9 and an overall financial health rating of "GREAT," Deckers demonstrates robust operational efficiency.

Despite these positive outcomes, Deckers’ HOKA brand did not meet consensus revenue estimates, falling short by $23 million. This marks the first time since December 2021 that HOKA has missed revenue projections, a period that was notably affected by COVID-19 related supply disruptions. Although HOKA is recognized as having a credible growth strategy through increased brand awareness, international expansion, and diversified product applications, a slowdown in direct-to-consumer (DTC) sales growth has raised concerns about the brand’s momentum. After experiencing a growth of over 30% from the first to the third fiscal quarter of 2025, HOKA’s year-over-year growth slowed to just 3%, including declines in the U.S. market. This slowdown comes despite the company’s overall revenue growth of 16.3% in the last twelve months, according to InvestingPro data.

Stifel analysts pointed out that this deceleration in DTC growth poses questions about the brand’s potential for sustained multi-year expansion. The analysts anticipate that fiscal year 2026 earnings will remain flat due to the absorption of tariffs and the financial impact of investments. Moreover, the growth composition of HOKA, which now relies more on the expansion of wholesale doors, and a greater contribution from UGG, is seen as less favorable compared to the DTC-driven model that HOKA has followed in recent years.

The current valuation of Deckers Outdoor Corporation is considered intriguing by Stifel analysts, who are looking for clearer indications of HOKA’s brand extensibility before adopting a more positive stance. The reaffirmed $127 price target is based on an estimated 12.6x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) and 18.7x price-to-earnings (P/E) on fiscal year 2027 estimates. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations, with the company maintaining strong fundamentals including a current ratio of 3.72 and more cash than debt on its balance sheet. Investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, which provides detailed analysis of Deckers’ financial health, valuation metrics, and growth prospects among 1,400+ top US stocks.

In other recent news, Deckers Outdoor Corporation reported its fourth-quarter earnings for fiscal year 2025, with earnings per share (EPS) of $1.00, surpassing the consensus estimate of $0.60. This was largely due to strong performance in UGG sales and gross margins, although the Hoka brand’s growth came in at 10%, falling short of the anticipated 13-14%. Piper Sandler maintained a Neutral rating and a $100 price target, citing a modest sales beat and a slowdown in the direct-to-consumer channel in the U.S. Meanwhile, UBS increased its price target to $169, maintaining a Buy rating, driven by anticipated EPS growth and potential sales expansion for the Hoka brand. Conversely, KeyBanc downgraded Deckers’ stock to Sector Weight, expressing concerns over Hoka’s slowing growth and competitive pressures. Evercore ISI also downgraded the stock to In Line, lowering the price target to $110 from $235, due to deceleration in the growth of Deckers’ key brands, UGG and Hoka. Citi analysts, however, upheld a Buy rating with a $150 target, suggesting the recent stock sell-off might be a buying opportunity, given the underlying demand for Hoka. The company’s new $2.25 billion stock buyback program also adds a strategic dimension to its financial maneuvers.

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