Deckers Brands (DECK) was downgraded to Hold from Buy at Stifel on Thursday, with the 12-month price target for the stock lifted to $709 from $600.
In the note to clients covering the sports and lifestyle brands sector, the firm acknowledged various positives for the company, including the fact it is an innovation leader.
However, the investment firm is mindful of the margins relative to structurally sustainable levels for the stock and other "standout performers" in the sector, including CROX, DKS, and LULU.
"For these businesses, we encourage investors to consider the context of valuation and seek confidence in additional drivers of earnings growth sufficient to support the multiple," wrote analysts at Stifel.
"High-multiple names are likely to require a credible case for strong topline growth and additional opportunity for operating leverage. Growth potential is important for lower-multiple names, but additional levers such as balance sheet optionality could be sufficient," they added.
Stifel also believes DECK shares have rerated meaningfully higher and are currently valued comparably to the highest multiple stocks in the group despite more modest growth expectations and a less defensible competitive position.