Deckers Outdoor Corp (NYSE: DECK) is in focus on Tuesday after a Bank of America analyst announced a “buy” rating on the footwear company.
Deckers stock should be worth $425
That’s an interesting call considering the Goleta-headquartered firm is already up about 60% versus its year-to-date low.
Still, Christopher Nardone is convinced the Deckers stock should be worth $425 – up another 20% from here. His bullish view is chiefly predicated on the “HOKA” business.
The crown jewel in Deckers’ portfolio is HOKA. We have confidence the brand will continue to be a leader in the specialty run/walk category, as sell through trends based on our channel checks remain robust.
Why else is he bullish on the Deckers stock?
Nardone recommends buying this premium name for its “compelling growth trajectory” and sees “HOKA” as its ticket to continued gains in market share. The analyst wrote:
We see a clear runway for growth and expect brand revenue to double to $2.20 billion by fiscal year 2025, led by leading product innovation.
On the other hand, is the stable “UGG” business that he expects will help fund the massive growth in HOKA. Nardone is valuing the Deckers stock at 14 times his EV/EBITDA estimate for 2024.
Solid free cash flow was among other reasons cited for the constructive outlook. The $9.0 billion company, he hopes, will continue to do well in a recessionary environment that fuels a slowdown in consumer spending.
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