On Friday, Deckers Outdoor Corporation (NYSE:DECK) shares saw its price target increased by Citi to $980.00, up from the previous $920.00, while the firm kept a Neutral rating on the stock.
The upgrade comes in the wake of a robust fourth-quarter earnings report, where Deckers reported earnings per share (EPS) of $4.95, significantly surpassing the consensus estimate of $2.97. This performance was fueled by impressive growth in the company's Hoka and UGG brands, which saw increases of 34% and 15% respectively.
The fiscal year 2024 marked a milestone for Deckers, with its two prominent brands, Hoka and UGG, achieving some of the footwear industry's most substantial growth.
The brands have been successful in attracting new customers, and this trend seems to be continuing into the first quarter, with management projecting high-teen sales growth, which is slightly above the consensus forecast of 16%. This growth is attributed to the ongoing strength in both the UGG and Hoka brands.
Looking ahead, Deckers has provided conservative earnings guidance for fiscal year 2025, with EPS expected to be between $29.50 and $30.00. Despite facing challenging comparisons, as UGG's previous year growth was 18%, the guidance anticipates a mid-single-digit increase. This cautious outlook is balanced by the sustained popularity of the UGG brand and the potential for expansion in international markets.
Citi's analysis notes that Deckers' business is robust, with no apparent weaknesses in its current narrative. However, it is worth mentioning that Deckers' shares experienced an approximate 8% rise in pre-market trading.
The company's forward enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple is estimated at 22 times for fiscal year 2024, indicating a balanced risk/reward scenario according to the analyst's viewpoint.
InvestingPro Insights
Following Citi's revised price target for Deckers Outdoor Corporation (NYSE:DECK), real-time data and insights from InvestingPro help to further contextualize the company's financial health and market position. Deckers' strategic management of its balance sheet is reflected in the fact that it holds more cash than debt, providing a solid foundation for future growth. Analysts have recognized the company's potential, with six of them revising their earnings upwards for the upcoming period, signaling confidence in Deckers' performance.
The company's market capitalization stands at a robust $23.22 billion, and it boasts a healthy P/E ratio of 32.49, which aligns with its near-term earnings growth. Despite trading at high valuation multiples, such as a Price/Book ratio of 11.02, Deckers has demonstrated a strong return on assets at 23.51% for the last twelve months as of Q3 2024. Moreover, the company's impressive revenue growth of over 15% during the same period underpins its robust earnings report and optimistic sales growth projections.
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