It’s time for Deckers Outdoor (NYSE:DECK) to showcase its new look, though we’re not talking about the launch of a new design, but the introduction of a new share structure.
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Earlier this month, shareholders approved a six-for-one forward stock split, and as of this morning (Tuesday) trading has kicked off on a post-split adjusted basis.
Since its 1993 IPO, this is only the second time that the company has carried out a forward stock split, the first being a 3-for-1 split in July 2010. This split is down to the fact over the years the shares have posted some serious gains, mirroring the company’s growth profile. CEO Dave Powers said the split will make the stock “more affordable and attractive to a broader group of potential investors.”
They needn’t worry too much about being attractive, says Baird’s Jonathan Komp, an analyst ranked in the top 3% of Street stock pros. Following recent conversations with the management team, Komp came away convinced more success is in the cards.
“DECK expressed a confident near-term tone, and could ramp cash returns via buybacks and potentially a dividend,” the 5-star analyst said. “Upside to F2025E guidance (see ~10%+) plus industry leading growth +margin/ROIC justify premium valuation (NTM P/E 27X), still supporting a compelling multi-year compounding return potential.”
Demand for both the HOKA and UGG brands continues to be strong and Komp believes DECK has provided its F2025E guidance (10% revenue growth; EPS of $29.75-$30.65) with “healthy conservatism.” This includes revenue growth weighted towards the first half of the year and a decrease in full-priced selling, resulting in second-half EPS being roughly flat year-over-year and gross margins declining by over 250 basis points, despite the fact “current trends look strong.”
The investment case is easy to make, says Komp, given DECK’s “best-in-class growth +margin/ROIC justify premium valuation.” As such, the analyst rates the shares as Outperform (i.e., Buy), backed by a $180 price target, implying the stock will surge ~16% over the next 12 months. (To watch Komp’s track record, click here)
Most of Komp’s colleagues share that sentiment. Based on a mix of 12 Buys vs. 2 Holds, the stock claims a Strong Buy consensus rating. Going by the $184.12 average price target, the shares are set to generate 12-month gains of ~19%. (See DECK stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
