On Wednesday, UBS maintained a positive outlook on Deckers Outdoor Corporation (NYSE:DECK) shares, raising the company's price target to $226 from $225 while keeping a Buy rating on the shares. The adjustment follows observations that Deckers' Hoka brand has continued to experience strong revenue growth in the second quarter. The firm anticipates this momentum will lead to a $0.10 earnings per share (EPS) beat for Q2 2025.
The analysis by UBS suggests that Deckers Outdoor's fiscal year 2025 guidance may surpass market expectations due to the robust performance of the Hoka brand. This projection is made with consideration of potential risks, such as the possibility that the UGG brand's direct-to-consumer (DTC) channel sales growth might not meet expectations.
The options market indicates an anticipated price movement for Deckers Outdoor stock, with a predicted fluctuation of +/- 7.8% around the upcoming financial event. This figure is slightly above the company's historical average move of 7.3%. UBS has expressed agreement with the options market's expectations regarding the stock's potential price volatility.
The financial institution's report also acknowledges the balance of potential outcomes for Deckers Outdoor, referring to it as a "moderately positive upside/downside skew around the event." This assessment reflects a cautious optimism, factoring in both the potential for the company's guidance to exceed expectations and the risks associated with the UGG brand's performance.
In other recent news, Deckers Outdoor Corporation has been the subject of various analyst ratings and projections. Guggenheim initiated coverage on Deckers with a neutral rating, citing the company's current valuation and anticipating a 20% increase in sales over the next few years for its HOKA brand.
However, Seaport Global Securities downgraded Deckers from "Buy" to "Neutral", expressing concerns about diminishing momentum for the HOKA and UGG brands. Truist Securities increased the stock price target for Deckers to $205.00, expressing confidence in the company's continued strong performance, while Evercore ISI revised its price target for Deckers to $183.00 but maintained an Outperform rating.
Deckers has also reported a robust 22% increase in Q1 FY2025 revenues, largely due to a 30% surge in revenue from the HOKA brand and a 14% rise from the UGG brand, leading to an upward revision of the company's annual profit forecast. The company recently underwent a 6-for-1 stock split, which was endorsed by analysts from Williams Trading and TD Cowen, who adjusted their price targets to reflect the new valuation.
Moreover, Stefano Caroti is set to take over as the new CEO of Deckers Outdoor Corporation as the company continues to experience growth and strategic changes. These are among the company's recent developments.
InvestingPro Insights
Deckers Outdoor Corporation's (NYSE:DECK) strong performance, as highlighted by UBS, is further supported by real-time data from InvestingPro. The company's revenue growth of 20.3% over the last twelve months and a robust 22.13% quarterly growth align with UBS's positive outlook on the Hoka brand's performance. This growth trajectory is particularly impressive given Deckers' substantial market capitalization of $24.69 billion.
InvestingPro Tips reveal that Deckers is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.55. This suggests the stock may be undervalued considering its growth prospects, which could support UBS's bullish stance and increased price target. Moreover, the company's strong financial health is evident from its ability to cover interest payments with cash flows and its liquid assets exceeding short-term obligations.
Investors should note that Deckers has shown a high return over the last year, with a remarkable 94.51% price total return. This performance underscores the market's confidence in the company's brands and growth strategy. For those seeking more comprehensive analysis, InvestingPro offers 10 additional tips that could provide deeper insights into Deckers' financial position and market potential.
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