On Wednesday, KeyBanc initiated coverage on Deckers Outdoor Corporation (NYSE:DECK), assigning the stock an Overweight rating with a price target of $960. The firm's projection is based on approximately 30.1 times their estimated 2026 earnings per share.
"We believe DECK could deliver >10% top-line growth in FY25, and while that marks a sequential slowdown from 2024, we believe demand is still robust within both UGG and HOKA and estimates could prove to be conservative due to the ongoing casualization of apparel and new/innovative products," said a KeyBanc analyst.
KeyBanc's analysis indicates that current estimates might be on the conservative side, taking into account the ongoing trend toward casual apparel and the introduction of new and innovative products. The firm sees Deckers Outdoor's expansion in direct-to-consumer (DTC) distribution as an opportunity in the near to mid-term. The DTC channel, while currently a smaller portion of revenue, is expected to grow through marketing efforts and strategic placements, which could accelerate DTC sales and improve customer retention.
The coverage by KeyBanc reflects confidence in Deckers Outdoor's market position and potential for growth, despite a projected deceleration in the rate of revenue increase after 2024. The firm believes that the company's strategic focus on DTC channels will play a significant role in its continued success.
InvestingPro Insights
As Deckers Outdoor Corporation (NYSE:DECK) garners an Overweight rating from KeyBanc with a bullish price target, insights from InvestingPro further illuminate the company's financial health and market performance. According to InvestingPro, Deckers Outdoor holds more cash than debt on its balance sheet, indicating a robust financial position that could support strategic investments and weather economic uncertainties. This aligns with KeyBanc's positive outlook on the company's potential for growth and expansion in direct-to-consumer channels.
InvestingPro Data shows a strong market capitalization of $21.25 billion, with a Price/Earnings (P/E) Ratio of 29.9, which is considered low relative to near-term earnings growth. The company's revenue has grown by 15.34% over the last twelve months as of Q3 2024, showcasing a solid performance in its sector. Furthermore, Deckers Outdoor has experienced a significant return over the last week, with a 9.5% price total return, adding to a remarkable 97.64% return over the last year, emphasizing the company's strong market presence and investor confidence.
InvestingPro Tips highlight that analysts have revised their earnings forecasts downwards for the upcoming period, which could be a consideration for investors looking at long-term value. However, with 13 additional InvestingPro Tips available, including insights on valuation multiples and profitability predictions, investors can delve deeper into the company's prospects. For those interested in an extensive analysis, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
These data points and tips from InvestingPro, when combined with the analysis from KeyBanc, provide a comprehensive view of Deckers Outdoor's market potential and financial stability, offering investors valuable information for making informed investment decisions.
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