Canaccord Genuity Remains a Buy on Deckers Outdoor

By Austin Angelo

Canaccord Genuity analyst Camilo Lyon reiterated a Buy rating on Deckers Outdoor (NYSE: DECK) today and set a price target of $69. The company’s shares opened today at $59.77.

Lyon observed:

“We remain positive on DECK heading into FQ4 results on Thursday, May 25 AMC. We are projecting EPS of -2c vs. -6c consensus. Given the activist involvement, we believe FQ4 is largely inconsequential to the stock from a sales/EPS perspective. In our opinion, the most important driver for the stock continues to be the ongoing exploration of strategic alternatives. Recall, the company last month formally announced a strategic review, which includes the possibility of a sale of the business. In our note following the announcement (link here) we estimated a fair value takeout price for DECK approximates $75/share. That said, we are not likely to get many progress updates of the strategic review until it is complete. As such, we anticipate the focus will turn to the fundamentals of the business, centered on two key factors: (1) the backlog/sales growth guidance, and (2) the expense savings initiatives. Despite challenges in the US wholesale channel, our industry checks suggest orders for UGGs could be flat to down slightly, a positive outcome in our view. We believe the new Classic line extensions (Classic 2, Slim, Luxe, Street) experienced strong sell-throughs this past winter season at w/s, boding well for orders. The bigger focus will be on the $150M in total cost savings DECK is pursuing and the potential for further margin-enhancing initiatives. We are modeling DECK to show a decline in SG&A dollar growth in F18 of $7M, which could be conservative. Overall, we believe the ongoing sale process, strengthening product line and cost savings initiatives provide ample idiosyncratic reasons to remain positive on the stock.”

According to, Lyon is ranked 0 out of 5 stars with an average return of -4.7% and a 40.0% success rate. Lyon covers the Consumer Goods sector, focusing on stocks such as Columbia Sportswear, Sequential Brands, and Foot Locker Inc.

Deckers Outdoor has an analyst consensus of Moderate Buy, with a price target consensus of $62.20.

The company has a one year high of $69.94 and a one year low of $44. Currently, Deckers Outdoor has an average volume of 633K.

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Deckers Outdoor Corp. engages in the business of designing, marketing and distributing footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The company operates through six segments: UGG, Teva, Sanuk, Other Brands Wholesale, eCommerce and Retail Store. The UGG segment sells its UGG footwear, handbags and accessories primarily through department stores. The Teva segment sells its Teva footwear primarily through outdoor and sporting goods retailers, such as REI, L.L. Bean, Dick’s Sporting Goods and The Sports Authority, as well as on-line retailers such as The Other Brands Wholesale segment’s brands are sold throughout the world at department stores, outdoor specialty accounts and with online retailers that support its brand ideals of comfort, style and quality. The Sanuk segment sells its footwear through independent action sports retailers including specialty surf and skate shops, outdoor retailers such as REI and Bass Pro Shops, specialty footwear retailers and larger national retail chains including Nordstrom, Journey’s, Dillard’s, DSW, and The Buckle. The eCommerce segment enables the company to market, communicate and build relationships with the consumer. The Retail Store segment allows the company to directly reach its customers and meet the growing demand for its products. Deckers Outdoor was founded by Douglas B. Otto in 1973 and is headquartered in Goleta, CA.