On Thursday, Deckers Outdoor Corporation (NYSE: NYSE:DECK), a footwear and apparel company, received a new Outperform stock rating from Evercore ISI, accompanied by a bullish price target of $960. The investment firm highlighted the company's strong brand momentum and potential for margin expansion as key drivers behind the optimistic outlook.
The analyst from Evercore ISI cited a "supportive macro backdrop" as a contributing factor to Deckers' promising growth trajectory. This includes sequential improvements in the firm's Softlines Leading Indicator and the potential for interest rate cuts, which historically have led to multiple expansions in the market. These elements are seen as positive influences that could bolster the company's performance.
Deckers' growth profile was described as high quality, with a portfolio of differentiated brands that continue to sustain strong momentum across various metrics. The analyst's projection for Deckers includes an estimated 13% compound annual growth rate (CAGR) in EBITDA (earnings before interest, taxes, depreciation, and amortization) from calendar year 2023 to 2025. This forecast significantly outpaces the consensus estimate of a 7% CAGR for the same period.
The firm's confidence in Deckers is further supported by the company's ability to expand its margins. This aspect of the business, when combined with the aforementioned macroeconomic factors and brand strength, underpins the analyst's expectation for Deckers to outperform in the coming years.
The new price target of $960 reflects a substantial potential upside from Deckers' current trading price. Investors and market watchers will be keeping a close eye on the company's financial performance to see if it aligns with Evercore ISI's positive projections.
InvestingPro Insights
Following the upbeat assessment by Evercore ISI, Deckers Outdoor Corporation (NYSE: DECK) presents an interesting case for investors, as highlighted by recent data and insights from InvestingPro. The company's financial health appears robust, with a Market Cap of approximately $21.77 billion and a notable Revenue Growth over the last twelve months as of Q1 2023, standing at 15.34%. This growth is slightly higher when looking at the quarterly figure, which reached 15.95%.
One of the InvestingPro Tips notes that Deckers holds more cash than debt on its balance sheet, which suggests a strong financial position that could provide resilience against market volatility and enable further investments in growth opportunities. Additionally, the company's Gross Profit Margin for the same period was a healthy 54.43%, indicating efficient operations and cost management.
Another relevant InvestingPro Tip is that Deckers is trading at a high Price / Book multiple of 10.35 as of Q1 2023. This could suggest that the market has high expectations for the company's future growth and profitability, aligning with the positive outlook from Evercore ISI. Investors may also be encouraged by Deckers' significant one-year Price Total Return of 104.12%, reflecting strong investor confidence and market performance.
For those seeking additional insights and metrics, InvestingPro offers more InvestingPro Tips that could further inform investment decisions. To access these tips and a wealth of other financial data, investors can visit https://www.investing.com/pro/DECK and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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