UBS raises Deckers Outdoor price target to $169, maintains Buy

On Friday, UBS analyst Jay Sole increased the price target for Deckers Outdoor Corporation (NYSE: NYSE:DECK) stock, indicating a brighter outlook for the company. The new target is set at $169.00, up from the previous $158.00, with a sustained Buy rating. According to InvestingPro data, DECK currently trades at a P/E ratio of 19.92 and has achieved impressive revenue growth of 16.28% over the last twelve months.

Sole’s optimism stems from the anticipated earnings per share (EPS) growth over the next few quarters, driven by the accelerating sales growth rate of DECK’s Hoka brand. According to Sole, this growth could shift the market’s perception of Deckers, highlighting its potential to expand sales at a low double-digit compound annual growth rate (CAGR). This change in sentiment is expected to elevate Deckers’ forward-year 1 estimated price-to-earnings (P/E) ratio to above 20 times, from the mid-teens where it currently stands.

The market has been cautious due to Hoka’s weaker direct-to-consumer (DTC) channel growth in the fourth quarter of 2025, interpreting it as a sign that the brand’s high-growth phase might be ending. However, Sole disagrees with this view, predicting that Hoka will grow at an 11% rate in the fiscal year 2026. He suggests there could be significant upside if tariffs do not lead to a U.S. recession.

Sole attributes the disappointing sales growth rate of Hoka in the fourth quarter of 2025 to the brand’s shift to new styles, namely the Bondi 9 and Clifton 10. The transition was not as smooth as expected, with an excess of older styles being sold at discounted prices in the wholesale channel, which likely affected sales in Hoka’s DTC channel. While Sole acknowledges that it is reasonable for the market to reassess its view of Hoka due to these challenges, he believes that the current stock price fully reflects these issues. Recent market reaction has been notably negative, with InvestingPro data showing a 21% decline in the past week alone. Despite these challenges, the company maintains strong fundamentals with a healthy gross margin of 57.88% and appears undervalued according to InvestingPro’s Fair Value analysis.

In other recent news, Deckers Outdoor Corporation reported its financial results for the fourth quarter of 2025, with earnings per share (EPS) of $1, surpassing the forecasted $0.59. The company achieved a revenue of $1.02 billion for the quarter, slightly above expectations of $1.01 billion, contributing to a full fiscal year revenue of $4.986 billion, marking a 16% year-over-year increase. Despite these strong earnings, the stock experienced a decline in aftermarket trading. Citi analysts maintained a Buy rating with a $150 price target, noting robust UGG sales and gross margins, although the HOKA brand’s growth of 10% fell short of expectations. Piper Sandler reiterated a Neutral rating with a $100 target, highlighting a slowdown in the direct-to-consumer channel and missing growth targets for the HOKA brand. KeyBanc downgraded the stock to Sector Weight, citing concerns over HOKA’s competitive position and the impact of price increases on demand. Evercore ISI also downgraded the stock to In Line and reduced the price target to $110, expressing concerns about growth prospects for UGG and HOKA. Despite these challenges, Deckers announced a new $2.25 billion stock buyback program, indicating a potential repurchase of up to 15% of its market capitalization.

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