By Sam Boughedda
Piper Sandler initiated shares of Deckers Brands (NYSE:DECK) with an Overweight rating and a $440 price target in a note to investors on Tuesday.
Analysts there said the firm is expanding its coverage of athletic and footwear, and it remains bullish on innovation-driven athletic footwear, which includes HOKA.
"In the current environment, we view penetration with the run specialty consumer as a key advantage which should also perpetuate the lifestyle component. We think HOKA can grow at a 25% CAGR in the medium-term, and solid 17.5%+ operating margin will power capital return to DECK shareholders," wrote the analysts.
In addition, the Piper Sandler analysts believe that as brands enhance their DTC focus, there will be a selected set of wholesale retailers that will be important brand partners.
"We think Famous Footwear is positioned well in the family channel where we see less risk of online disruption, but we are more cautious on near-term results given exposure to a middle-income consumer," they added. "We initiate Overweight on DECK due to momentum at HOKA, solid FCF and capital return to shareholders, and near-term tailwinds for UGG."