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Investing.com - UBS maintained its Buy rating and $158.00 price target on Deckers Outdoor (NYSE:DECK) stock, citing significant undervaluation and strong growth prospects. This optimistic outlook aligns with broader market sentiment, as InvestingPro data shows 19 analysts have recently revised their earnings estimates upward for the upcoming period.
The investment firm expects Deckers to deliver earnings per share (EPS) surprises in upcoming quarters, driven by robust sales growth from both the HOKA and UGG brands. UBS believes this performance will demonstrate Deckers’ capability to maintain low double-digit compound annual growth rate. The company’s recent performance supports this view, with revenue growing 15.49% and maintaining a strong gross profit margin of 57.63%.
UBS analysts predict that strong performance could potentially push Deckers’ price-to-earnings ratio above 20x from its current 18x level. The firm’s conviction was strengthened following meetings with management and observations from HOKA brand activations at UTMB. According to InvestingPro, the company maintains excellent financial health with a GREAT overall score, supported by strong returns on equity of 44%.
The investment bank currently models Fiscal Year 2028 EPS of $7.90 for Deckers but now sees a higher probability of its $10.00 upside case materializing. This more optimistic outlook addresses one of the market’s primary questions regarding Deckers’ long-term earnings potential.
UBS identified the market’s main concern as "where will DECK’s EPS be in 3-5 years?" and has expressed increased confidence in the company’s ability to exceed baseline projections.
In other recent news, Deckers Outdoor reported a strong fiscal first quarter, with its HOKA brand sales surpassing Street expectations. The company’s earnings per share exceeded estimates by 21%, and sales outperformed forecasts by 7%, according to TD Cowen. Evercore ISI noted that Deckers’ revenue reached $965 million, beating their estimates by $56 million and Street estimates by $64 million, partly due to wholesale timing shifts. Raymond James highlighted Deckers’ better-than-expected performance in earnings per share, revenue, gross margin, and EBIT margin, with both HOKA and UGG brands surpassing revenue expectations. However, HOKA’s U.S. direct-to-consumer business experienced a year-over-year decline. Truist Securities, TD Cowen, and Raymond James all raised their price targets for Deckers, with Truist citing HOKA’s strength and Raymond James maintaining a Strong Buy rating. Evercore ISI also increased its price target, reflecting the company’s robust first-quarter revenue. Additionally, Deckers Brands nominated Patrick J. Grismer to its Board of Directors, as Dave Powers plans to retire after over nine years of service.
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