Deckers Outdoor's (DECK) "solid" fiscal Q4 report reinforces the view that the company is a compelling but undervalued growth opportunity, UBS said in a note emailed Friday.
The analysts said they expect the company to outperform expectations over the next year as its Hoka and UGG brands continue to grow faster than the market assumes, driving stronger revenue and earnings growth and supporting a higher valuation over time.
While the market may focus on an H2-weighted fiscal 2027 outlook and interpret it as slowing momentum, the analysts said they disagree. The analysts added that investors are overlooking key fundamentals, gross margin and inventory.
In fiscal Q4, gross margin rose 85 basis points year-over-year despite tariffs and tough comparisons, and overall gross margin has expanded 740 basis points over the past three years. Inventory also fell 2% year over year, even with a +5% fiscal Q1 2027 sales guide and tariff headwinds, the analysts said, adding that these metrics suggest both Hoka and UGG remain "very healthy brands."
The analysts also raised their adjusted diluted earnings per share estimate for fiscal 2027 by about 3% from $7.30 to $7.55.
UBS raised its price target on Deckers Outdoor to $161 from $145 while keeping its buy rating.
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