By
Bloomberg
Published
Jul 12, 2024
With Hoka and Ugg parent Deckers Outdoor Corp. peeling back from all-time highs, it’s the right time to buy, according to one Wedbush analyst.
The footwear company, which Tom Nikic says is “one of the strongest, best-run companies” in his coverage, is down nearly 20% from a closing record reached at the end of May. That’s a significant discount for Nikic, who has an outperform rating and $1,030 price target on the stock, about 16% above current trading.
“They’ve been very good with new product development and recognizing that they can’t just rest on their laurels,” Nikic said in an interview, adding that Deckers’ top brands, Hoka and Ugg, are “still hot.”
In the near-term, Nikic sees Hoka-branded athletic shoes and apparel driving most of the momentum as the first quarter is usually a “seasonal low point” for Ugg — which is widely known for its omnipresent sheepskin boots. Commentary around the two brands will be key when Deckers reports earnings later this summer, as the company usually gives its smallest guidance raise of the year in the first quarter, he noted.
“The stock reaction will be dictated more by management’s tone around the two core brands (which we expect to be bullish) rather than a major change to estimates,” he wrote in a Thursday note.
The stock has its critics. On Wednesday, Deckers was the worst performer in the S&P 500 after data-driven research firm M Science pointed to slowing growth for Hoka and Ugg in June. Shares fell 0.5% Thursday, putting the company on track for its worst weekly performance since April.
Overall though, Wall Street remains predominantly bullish on the footwear maker, handing the company 16 buy ratings, five holds and two sells according to data compiled by Bloomberg. Over the past 12 months, the company has been the top performer in the S&P 500’s consumer discretionary sector thanks to a more than 60% rally.
