Investment research firm Piper Sandler has maintained an Underweight recommendation on Deckers Outdoor Corporation (NYSE: DECK), reaffirming a price target of $85.00 as the company approaches its fiscal third-quarter earnings announcement on January 29. This valuation is notably below InvestingPro’s Fair Value estimate, which identifies the stock as currently undervalued despite a considerable decline exceeding 53% over the last twelve months.
Piper Sandler has articulated specific reservations concerning the future trajectory of Deckers' flagship performance footwear brand, HOKA, particularly in the United States. The firm also anticipates that the company's forward guidance on wholesale demand may be conservative or subdued. Nevertheless, data compiled by InvestingPro contends that Deckers enjoys a "GREAT" overall financial health score, underscored by a substantial 12.6% revenue growth within the most recent year.
Market expectations suggest that Deckers is likely to surpass earnings forecasts in the upcoming report and may revise its full-year earnings per share (EPS) guidance upward, while maintaining existing sales projections. Despite these promising indicators, Piper Sandler's outlook remains cautious regarding HOKA's sustained brand vitality. The company highlighted underwhelming website traffic metrics for HOKA in December, despite deeper promotional activities on the brand's official online platform.
The analyst firm identifies HOKA as the primary catalyst in driving Deckers’ stock performance. Proponents regard it as a growth engine capable of delivering double-digit sales increases, fueled by expansion into international markets. Conversely, skeptics emphasize issues such as a lack of fresh product innovation and greater reliance on discounting strategies as potential constraints to demand sustainability.
Further cause for concern from Piper Sandler involves the potential risk to Deckers' EBIT margins, which currently stand above 21%. This margin pressure represents a significant factor in the firm's guarded stance. Importantly, the company's stock trades at a price-to-earnings (P/E) ratio of 15.05 and boasts a balance sheet with more cash on hand than debt, complemented by a robust current ratio of 3.07.
For investors seeking in-depth coverage of DECK alongside over 1,400 other companies, full analytical reports are available through InvestingPro’s Pro Research platform.
Additional market developments include V.F. Corporation assuming Deckers Brands’ position on Needham's Conviction List, while Needham continues to assign a Buy rating to Deckers despite this change. Baird recently downgraded Deckers Outdoor from Outperform to Neutral, citing deceleration in HOKA's growth relative to previous double-digit increases. In contrast, UBS reaffirmed its Buy rating, projecting a compounded annual sales growth rate of 13% for HOKA over the next four years and a 10% CAGR for Deckers' EPS during the same period.
Separately, CareTrust REIT was upgraded from Hold to Buy by Stifel, who established a price target of $117.00 on expectations for heightened investment activity and strong rent coverage metrics. CareTrust's portfolio is predominantly composed of skilled nursing facilities, which provide 82% of its net operating income. These developments reflect a spectrum of analyst opinions shaping the outlook for Deckers and the broader consumer discretionary and healthcare real estate sectors.
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