DECK: Brand Strength And Buybacks Will Support Future Upside Potential

Analysts have trimmed their price target on Deckers Outdoor by about $0.60 per share, reflecting slightly lower fair value and profit margin assumptions, even as they acknowledge resilient Hoka and Ugg growth prospects and an overall still-attractive valuation.

Analyst Commentary

Recent Street research reflects a divided but generally constructive view on Deckers Outdoor, with shifts in ratings and price targets driven by updated assessments of growth durability, margin trajectory, and valuation support.

Bullish Takeaways

• Bullish analysts highlight the upgraded rating and unchanged higher price targets as evidence that the stock's re rated multiple still offers attractive upside relative to long term growth prospects.
• Management commentary has increased confidence in the multi year growth pathway for Hoka, supported by favorable supply and demand dynamics and brand momentum. This underpins estimates into fiscal 2027 and beyond.
• Several updates note improving plan attainment for both Hoka and Ugg, reinforcing the view that execution across key franchises can sustain above market growth even amid macro volatility.
• Some bulls argue that valuation screens as "awfully cheap" versus consensus growth expectations and peer multiples, suggesting that modest estimate risk is already reflected in the share price.

Bearish Takeaways

• Bearish analysts focus on softer implied second half guidance, particularly for Ugg, where revenue is expected to decline, and for Hoka, where growth is expected to slow to the low teens. This raises questions about the durability of the recent growth surge.
• Concerns around lagging direct to consumer performance and heightened competition in running footwear feed into fears that current EBIT margins may be near a peak, limiting further upside from operating leverage.
• Several price target cuts reflect a view that consensus estimates remain too high relative to near term trends, making the shares harder to defend despite a seemingly undemanding valuation.
• Mixed quarterly execution, including a recent result that fell short of some expectations, has led to reduced conviction labels and a more cautious stance on near term share performance, even where longer term theses remain intact.

What's in the News

• Urban Outfitters is integrating UGG into its On Rotation experiential retail concept, creating immersive, Gen Z focused holiday installations featuring core and new UGG styles in select flagship stores across major U.S. cities starting November 4, 2025 (company announcement).
• Deckers Outdoor issued guidance for the twelve months ending March 31, 2026, targeting approximately $5.35 billion in net sales and diluted EPS between $6.30 and $6.39 (company guidance).
• From July 1, 2025 to October 9, 2025, Deckers repurchased about 2.9 million shares for $317 million, bringing total buybacks under its long running program to roughly 47.9 million shares, or 28.62% of shares outstanding, at a total cost of about $2.67 billion (company buyback update).

Valuation Changes

• Fair Value: Trimmed slightly to approximately $111.40 from about $111.97 per share, reflecting modestly lower profit margin assumptions.
• Discount Rate: Reduced marginally to roughly 8.62% from 8.63%, indicating a very small change in perceived risk profile.
• Revenue Growth: Increased slightly to about 6.96% from 6.72%, signaling a modestly more optimistic view on top line expansion.
• Net Profit Margin: Lowered slightly to around 16.63% from 16.79%, suggesting a small reduction in long term profitability expectations.
• Future P/E: Edged down minimally to approximately 17.26x from 17.29x, indicating a nearly unchanged valuation multiple on forward earnings.