Overview
Argus upgraded Deckers Outdoor (NYSE:DECK) to Buy from Hold on Thursday, citing the footwear maker’s re-established path to dependable sales growth and an attractive valuation at current share prices. InvestingPro analysis referenced in the upgrade indicates the stock appears undervalued and assigns the company a "GREAT" financial health score of 3.47 out of 5.
Brand performance and profitability
The company’s flagship UGG brand recorded 5% sales growth in the third quarter, while HOKA expanded 19% year over year. Both brands have posted sales increases across the past four quarters, according to the data cited by Argus. Deckers’ last twelve months performance shows a 40% return on equity and a 57.5% gross profit margin, metrics that illustrate the company’s strong profitability profile.
Guidance and recent results
Deckers reinstated its annual guidance and raised its fiscal 2026 outlook for both earnings and sales. In the third quarter the company exceeded expectations, delivering a revenue beat of $90 million and earnings per share that topped estimates by $0.62. These results prompted multiple analysts to revise price targets and ratings.
Market reaction and valuation
Shares of Deckers currently trade roughly 25% below their 52-week high. On valuation measures, the stock is trading at 16 times forward earnings, which sits near the low end of its historical forward-PE range of 13 to 33. The current price-to-sales ratio of 3.2 is below the midpoint of the company’s historical range of 2 to 6. An InvestingPro note highlighted that Deckers holds more cash than debt on its balance sheet, reinforcing the firm’s financial flexibility.
Analyst moves and market commentary
Following the quarterly results and guidance raise, several brokerages updated their outlooks. Stifel raised its price target to $140 and maintained a Buy rating, pointing to the company’s strong earnings. Truist Securities increased its target to $132, citing the performance of HOKA and UGG. Williams Trading set a new target of $160 and described the company’s raised full-year 2026 guidance as conservative. Piper Sandler, while keeping an Underweight rating, moved its target to $95 after acknowledging the earnings beat and improved guidance and noting healthy growth across direct-to-consumer and wholesale channels. Bernstein adjusted its target to $90 and maintained an Underperform rating, but observed that HOKA has returned to growth in U.S. direct-to-consumer channels.
Technicals and momentum
Argus noted a technical pattern of higher lows and higher highs in Deckers’ shares since October, an observation that aligns with the company’s revived growth trajectory and the recent earnings outperformance.
Analysis summary
Deckers’ latest quarter delivered both top-line and bottom-line upside, led by continued strength at HOKA and a recovery at UGG. Management’s decision to reinstate and then raise fiscal 2026 guidance, combined with a balance sheet that shows more cash than debt, underpins the bullish view from Argus and several other analysts. Valuation multiples remain toward the lower end of historical ranges, which Argus cites as an additional reason for upgrading the stock.
Key points
- Argus upgraded DECK to Buy from Hold, highlighting renewed sales growth and attractive valuation metrics.
- UGG grew 5% and HOKA grew 19% in Q3, with both brands showing growth over the past four quarters; Deckers reported a $90 million revenue beat and EPS above estimates by $0.62.
- Valuation sits at 16x forward earnings and a price-to-sales ratio of 3.2; shares trade about 25% below the 52-week high.
Risks and uncertainties
- Analyst views remain mixed despite recent upgrades - some firms maintain Underweight or Underperform ratings and lower price targets, which could weigh on sentiment in the stock and the consumer discretionary sector.
- Valuation, while at the lower end of historical ranges, still reflects expectations for sustained brand performance; any slowdown in HOKA or UGG sales could affect retail and footwear market valuations.
- Although the company reports more cash than debt, broader shifts in wholesale and direct-to-consumer channels could create revenue mix uncertainty for apparel and footwear retailers.
Conclusion
Deckers’ combination of brand-level growth, margin strength, and an improved guidance profile has prompted Argus and several brokerages to take more positive stances on the stock, even as a subset of analysts remains cautious. The company’s financial metrics and cash position are cited as supportive fundamentals, while continued execution across direct-to-consumer and wholesale channels will likely determine whether the upgraded outlook is sustained.