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After the close on Thursday, Deckers (NYSE:DECK) released the figures for its latest quarter, topping consensus expectations for both profit and revenue, impressing Wall Street analysts.
The company reported earnings of $10.48 per share on revenue of $1.35 billion. Analysts expected earnings of $9.49 per share on revenue of $1.24B.
Reacting to the report, Cowen analysts, who maintained an Outperform rating on the stock and raised the price target to $480 from $476, told investors in a note that the company delivered more upside, although they noted that its guidance “appears conservative.”
Deckers said it sees FY2023 EPS between $18 and $18.50, versus the consensus of $18.20, while revenue is expected to come in between $3.5B and $3.53B, versus the consensus of $3.53B.
“Current execution and trends suggest Deckers is taking a conservative stance with Q4 sales guidance,” wrote analysts. “We still model upside to consensus sales and EPS expectations through FY24. DECK’s Q3 revenue was led by HOKA’s momentum across its product line, rising +91% y/y. We are raising our price target to $480, which represents 22x our FY24E EPS of $22.02 and 14x EV/EBITDA.”
They added that strong consumer demand for both HOKA and UGG, paired with product pipeline innovation, suggests “support for a continuation of double-digit topline growth in FY24 and a return to Gross Margin expansion on further freight cost easing and possibly some relief in the FX headwind.”
Meanwhile, UBS analysts said Deckers is a “strong growth stock.” They maintained a Buy rating on the stock, raising the firm’s price target to $540 from $530.
“Hoka is one of the world’s fastest growing footwear brands,” declared analysts. “We believe Deckers’ strong sales and EPS growth outlooks justify a 20x P/E. Yet, the stock trades at 19x, mainly because of macro concerns, in our view. We believe DECK’s strong 3Q report indicates the company is capitalizing on a market share gain opportunity that will allow it to deliver strong growth despite weak macro.”
