Stifel sustained its Hold rating for Deckers Outdoor (NYSE:) on Friday while raising the price target for the company from $775 to $825. This change is in response to Deckers’ latest financial results, which revealed a robust upside in the fourth fiscal quarter.
The company’s outlook for fiscal year 2025 is relatively conservative, with EBITDA projected to remain roughly steady year on year. Despite this projection, both revenue and earnings per share (EPS) significantly exceeded the initial guidance for fiscal year 2024, closing 9% and 35% higher, respectively.
Stifel acknowledges Deckers’ effective execution but expresses concern about the sustainability of the stock’s valuation, which currently surpasses 30 times the guided EPS and 20 times the implied forward EBITDA. The growth path of the HOKA brand is considered essential to the company’s valuation. Even though the HOKA guidance predicts a 20% increase in line with market expectations, a decrease in direct-to-consumer (DTC) sales in the fourth quarter is a focal point for the brand’s potential.
Moving forward, the revenue and adjusted EBITDA estimates for fiscal years 2025 and 2026 remain largely unchanged. However, the EPS forecast has been revised upward due to a projected lower tax rate and the impact of share buybacks. Although future upward revisions for fiscal year 2025 are possible, Stifel’s position indicates a cautious valuation approach. The firm concludes by reaffirming a Hold rating for Deckers Outdoor, with a revised 12-month price target of $825.
InvestingPro Perspectives
The financial robustness of Deckers Outdoor is highlighted by a balance sheet where cash assets surpass debt amounts, a comforting signal for investors prioritizing financial stability. This is further enhanced by analysts’ recent upward adjustments to their earnings forecasts for the forthcoming period, suggesting potential confidence in the company’s performance outlook. Moreover, Deckers has shown its ability to comfortably cover interest payments with its cash flows, a crucial measure for determining a company’s financial well-being.
Regarding valuation, Deckers is trading at a P/E ratio of 32.49, indicating investor sentiment about its earnings capacity. The company’s revenue growth over the past twelve months is an impressive 15.34%, demonstrating its ability to increase its financial top line. Additionally, with a notable 105.45% one-year price total return, Deckers has provided investors with substantial returns. For more comprehensive insights, investors can find additional InvestingPro Tips at https://www.investing.com/pro/DECK, which includes 16 more tips that could provide a thorough understanding of the company’s investment potential. Don’t forget to use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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