On Friday, Jefferies, a financial services company, raised its price target for Deckers Outdoor (NYSE: NYSE:DECK) shares, increasing it to $167 from the previous target of $150. The firm maintained a Hold rating on the stock.
Deckers Outdoor reported earnings that surpassed estimates by approximately 30%, with a notable sales beat of 9%. Following these results, the company has updated its sales and earnings per share (EPS) guidance upwards. The revision reflects cautious optimism, particularly concerning gross margin percentages.
The analyst noted that Deckers Outdoor's performance was robust, especially considering the quarter faced a difficult gross margin percentage comparison and mixed alternative data leading up to the earnings release. This strong performance supports the argument for near-term outperformance and demonstrates that the UGG brand has evolved into a higher-growth entity.
Looking ahead, the holiday quarter is expected to be more significant and competitive for Deckers Outdoor. Despite these challenges, the management's track record of effective execution is anticipated to continue to play a pivotal role in the company's success.
In other recent news, Deckers Brands reported a 20% year-over-year revenue increase in its second-quarter fiscal 2025, reaching $1.3 billion. The company's gross margins were strong, standing at 55.9%, and diluted earnings per share rose by 39% to $1.59. The HOKA brand played a significant role, surpassing $2 billion in trailing 12-month revenue for the first time, thanks to a 32% increase during the first half of the fiscal year.
Deckers also saw a 13% revenue increase from the UGG brand, largely attributed to successful product initiatives and international growth. In addition, the company executed a six-for-one forward stock split and raised its fiscal 2025 revenue guidance to approximately $4.8 billion.
These recent developments reflect Deckers' robust growth and strategic market positioning. The company's emphasis on marketing and demand creation spending, particularly for HOKA and UGG, indicates a commitment to further fuel brand growth.
However, Deckers is also managing gross margin pressures due to increased freight costs and anticipates mid-single-digit growth for UGG due to inventory levels and promotional strategies.
InvestingPro Insights
Deckers Outdoor's recent performance aligns with several key insights from InvestingPro. The company's strong earnings beat and raised guidance are reflected in InvestingPro Tips, which indicate that 9 analysts have revised their earnings upwards for the upcoming period. This positive outlook is further supported by the company's robust financial health, as it holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations.
InvestingPro data shows that Deckers Outdoor has a market capitalization of $23.18 billion and a P/E ratio of 28.99. The company's revenue growth is impressive, with a 20.3% increase over the last twelve months and a 22.13% quarterly growth. These figures support the analyst's observation of UGG brand's evolution into a higher-growth entity.
The company's profitability is also noteworthy, with a gross profit margin of 56.54% and an operating income margin of 22.51% for the last twelve months. This strong financial performance is reflected in the stock's remarkable 85.26% price return over the past year.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for Deckers Outdoor, providing a deeper understanding of the company's financial position and market performance.
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