On Friday, UBS maintained a positive stance on Deckers Outdoor Corporation (NYSE:DECK), a footwear and apparel company, by raising its price target from the previous $1,150.00 to $1,265.00 and reaffirming a Buy rating on the stock. The adjustment follows Deckers' impressive performance, particularly noting the success of its Hoka brand.
Deckers' Hoka brand, recognized as one of the world's fastest-growing footwear labels, reported a 40% year-over-year increase in direct-to-consumer (DTC) sales in the fiscal year 2024.
The UBS analyst believes that Hoka's continued momentum with consumers is expected to drive robust sales growth for Deckers in the fiscal year 2025, potentially leading to earnings that exceed market expectations.
According to UBS's forecast, Hoka could achieve a 19% compound annual growth rate (CAGR) in sales over the next five years. This projection is seen as the primary factor behind the firm's estimated approximately 14% five-year earnings per share (EPS) CAGR for Deckers. The analyst suggests that the company's strong sales and EPS growth outlook warrant a price-to-earnings (P/E) ratio of around 29 times.
The sentiment towards Deckers' stock is anticipated to remain bullish, especially as the company continues to demonstrate its capability to sustain a high rate of EPS growth. This positive outlook is further supported by Deckers' fourth-quarter 2024 EPS report, which reinforced UBS's confidence in their Buy recommendation for the company's shares.
InvestingPro Insights
Deckers Outdoor Corporation (NYSE:DECK) has been showing promising financial metrics that align with the positive outlook presented by UBS. According to InvestingPro data, Deckers boasts a strong market capitalization of $23.22 billion and a P/E ratio of 32.49, with a slight adjustment to 31.95 over the last twelve months as of Q3 2024. The company's revenue growth is also noteworthy, with a 15.34% increase over the same period. This growth is reflected in the company's gross profit margin, which stands at an impressive 54.43%. With these robust financials, Deckers is not just enjoying a surge in its stock price but also solidifying its fundamental value.
InvestingPro Tips highlight that Deckers holds more cash than debt, indicating a strong balance sheet. Additionally, the company is trading at a low P/E ratio relative to near-term earnings growth, which could suggest that the stock is undervalued given its growth prospects. It's also worth noting that six analysts have revised their earnings upwards for the upcoming period, reinforcing the optimistic sentiment. For investors looking to delve deeper into Deckers' financials and future outlook, there are 15 additional tips available on InvestingPro. To access these insights and more, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Overall, the data and tips provided by InvestingPro complement the article's narrative by offering quantitative support to the qualitative analysis provided by UBS. Deckers' financial health and growth indicators serve as a strong foundation for the bullish sentiment on the stock.
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