Stifel maintains hold on Deckers stock with $127 price target

Stifel maintained a Hold rating on Deckers Outdoor (DECK) with a $127 price target, noting strong UGG performance in fiscal Q4 2025 but a HOKA revenue miss of $23 million, the first since 2021. While HOKA's DTC growth slowed significantly, raising concerns about its multi-year expansion potential, Deckers' overall financial health remains robust, supported by a strong gross profit margin and expense control. Analysts are awaiting clearer signs of HOKA's brand extensibility before becoming more positive, and anticipate flat fiscal year 2026 earnings due to tariffs and investments.

Analysis

Deckers Outdoor Corporation's fourth fiscal quarter of 2025 presented a mixed operational narrative: its UGG brand significantly outperformed expectations, contributing $60 million more in revenue than Stifel's estimates, while the HOKA brand experienced its first revenue miss since December 2021, falling short of consensus by $23 million. This HOKA underperformance is particularly concerning due to a sharp deceleration in its direct-to-consumer (DTC) sales growth, which slowed to 3% year-over-year in Q4 from over 30% in the preceding three quarters, including declines in the U.S. market. Despite this, Deckers demonstrated robust overall financial health, achieving gross profit margins 370 basis points above expectations (at 57.9% overall), coupled with effective expense control, a favorable tax rate, a perfect Piotroski Score of 9, and an overall "GREAT" financial health rating from InvestingPro. The company also reported Q4 FY25 EPS of $1.00, beating the $0.60 consensus, and maintains strong fundamentals with more cash than debt and a current ratio of 3.72. However, Stifel analysts, maintaining a Hold rating and a $127 price target based on fiscal year 2027 estimates, anticipate flat fiscal year 2026 earnings due to tariffs and investments. They express caution regarding HOKA's sustained multi-year expansion potential, noting a less favorable growth composition shift towards wholesale and are awaiting clearer signs of HOKA's brand extensibility. Analyst sentiment is divided, with UBS (PT $169) and Citi (PT $150) remaining bullish, while KeyBanc (Sector Weight) and Evercore ISI (PT $110) downgraded due to growth deceleration concerns. A new $2.25 billion stock buyback program adds a layer of financial strategy.

Key Decisions for Investors

• Investors should carefully weigh the strong performance of the UGG brand and Deckers' overall robust financial health against the significant slowdown in HOKA's DTC growth and the mixed analyst outlook.
• Closely monitor HOKA's upcoming quarterly results and management commentary for signs of re-acceleration in DTC channels and success in its international expansion and product diversification, as this brand's trajectory is critical for future growth.
• Evaluate the current valuation, which InvestingPro suggests is undervalued, and the supportive $2.25 billion share repurchase program against the potential for flat earnings in fiscal year 2026 and the uncertainties surrounding HOKA's growth momentum before adjusting positions.