On Thursday, Deckers Outdoor Corporation (NYSE:DECK) saw its price target modestly increased to $1,005 from $1,000 by a TD (TSX:TD) Cowen analyst, who also reaffirmed a Buy rating on the stock. The analyst's decision reflects confidence in the company's continued strong performance and leadership within the softlines sector.
The analyst from TD Cowen highlighted Deckers Outdoor's effective execution, noting its innovation and market segmentation as key factors that set the company apart from its competitors.
These strategies have contributed to Deckers Outdoor's success in customer acquisition and retention, particularly for the HOKA brand, which has maintained robust growth while other brands have experienced a slowdown.
The updated price target is based on a multiple of 28 times the forecasted earnings per share (EPS) for fiscal year 2026. The analyst's model anticipates Deckers Outdoor reaching $880 million in annual free cash flow (FCF) by fiscal year 2027, which would represent a 4% yield. Additionally, the company is projected to achieve a mid-teens compound annual growth rate (CAGR) in EPS over a five-year period, as the HOKA brand is expected to grow to a $3 billion business.
The report also touched on the current sentiment within the sector, describing it as weak, which suggests a perception of higher risk as the company approaches its earnings report. InvestingPro Insights
Following the analyst's optimistic outlook on Deckers Outdoor Corporation (NYSE:DECK), real-time data from InvestingPro supports the positive sentiment surrounding the company's financial health and market performance. With a market capitalization of $21.09B and a P/E ratio standing at 29.46, the company shows substantial value reflected in its earnings. Notably, Deckers has demonstrated impressive revenue growth, with the last twelve months as of Q3 2024 showing a 15.34% increase, indicating a strong upward trajectory in sales.
An InvestingPro Tip worth mentioning is Deckers' ability to hold more cash than debt on its balance sheet, which is a reassuring sign of financial stability for investors. Additionally, the company's cash flows are more than sufficient to cover its interest payments, which further solidifies its financial footing. These aspects are particularly relevant as they align with the TD Cowen analyst's confidence in Deckers Outdoor's strong performance and leadership within the sector.
For those looking to delve deeper into Deckers Outdoor's financials and market potential, there are a total of 14 additional InvestingPro Tips available at https://www.investing.com/pro/DECK. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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