UBS reiterates Buy rating on Deckers Outdoor stock, sees growth potential

Investing.com - UBS has reiterated its Buy rating on Deckers Outdoor (NYSE:DECK) with a price target of $157.00, citing significant undervaluation and growth potential. According to InvestingPro data, the stock currently trades at a P/E of 13.4x, with a notably low PEG ratio of 0.62, suggesting attractive valuation relative to its growth prospects.

The investment firm believes DECK shares present "a very good opportunity" to invest in a growth company that the market is currently undervaluing. UBS expects Deckers’ earnings per share to exceed market expectations over the next twelve months, driven by better-than-anticipated performance from both its Hoka and UGG brands. The company maintains a "GREAT" financial health score on InvestingPro, with strong fundamentals including a current ratio of 2.94x and minimal debt exposure.

UBS disagrees with market sentiment that Deckers’ growth phase has ended, noting that investor disappointment likely stems from Hoka’s 11% sales growth in Q2 2026, which was approximately 200 basis points below market expectations, and perceived guidance reductions.

The firm clarified that Deckers’ newly initiated fiscal year 2026 guidance of low-teens growth for Hoka and low-to-mid-single-digit percentage growth for UGG should not be compared to previous commentary, as earlier figures excluded tariff impacts and were not formal guidance.

UBS projects that strong performance will remind investors that Deckers is capable of high-single-digit to low-double-digit compound annual growth rates in both sales and earnings per share, potentially driving the company’s forward price-to-earnings ratio from mid-teens currently to 20x.

In other recent news, Deckers Outdoor’s second-quarter results for fiscal 2026 have prompted several analyst firms to adjust their price targets for the company. Truist Securities lowered its price target to $105, citing the company’s results falling short of investor expectations. Telsey Advisory Group also set a price target of $105, noting better-than-expected sales and gross margin performance, although both the HOKA and UGG brands showed sequential deceleration. Meanwhile, TD Cowen reduced its price target slightly to $124, highlighting a 13% increase in wholesale growth and a 29% rise in international sales, despite a 2% decline in U.S. sales.

Bernstein SocGen Group expressed concerns over growth by lowering its target to $85, pointing out weak second-half guidance and shrinking sales for key brands in the U.S. market. BTIG maintained a Neutral rating, acknowledging the company’s exceeded expectations due to gross margin benefits from tariff timing and improvement in direct-to-consumer sales for the HOKA brand. The mixed performance of Deckers’ brands has led to varied analyst perspectives, with some firms maintaining a Buy rating despite the lowered price targets. These developments reflect the diverse challenges and opportunities Deckers Outdoor faces in the current fiscal environment.

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