Deckers Outdoors: A Hidden Gem Primed for a Comeback in 2024
Deckers Outdoors (NYSE: DECK) has endured a challenging year, with shares plunging over 40% year-to-date. Yet, savvy investors might want to pay close attention—this battered footwear giant could be setting the stage for a powerful rebound. UBS analyst Jay Sole recently doubled down on his bullish stance, reiterating a Buy rating and raising his 12-month price target to $158, implying a potential 32% upside from current levels near $120.
Why is Deckers suddenly looking so attractive? Let’s unpack the key drivers behind this compelling turnaround narrative—and what it means for investors hunting for growth in a volatile market.
Growth Potential Beyond the Headlines
Deckers owns some of the most coveted footwear brands in the market, including Ugg, Teva, and the breakout star Hoka. While Ugg remains a stalwart, it’s Hoka that’s capturing the spotlight with its innovative “max cushioning” running shoes. UBS highlights that Hoka is not just a fad but a trend with staying power, appealing to consumers seeking comfort and performance.
More importantly, Deckers is no longer just a footwear company—it’s evolving into a lifestyle brand. UBS points to promising expansion opportunities across new verticals like apparel, training gear, and recovery products. This diversification strategy could unlock multiple revenue streams, reducing reliance on seasonal footwear sales and cushioning future growth.
Geographic Expansion: The Next Frontier
One of the most underappreciated growth catalysts is Deckers’ push into international markets, particularly Asia and Europe. These regions represent vast, untapped consumer bases with increasing demand for premium and performance footwear. UBS underscores “major” expansion opportunities here, which could significantly boost Deckers’ global footprint and top-line growth.
Recent data from Statista shows the global athleisure market is expected to grow at a CAGR of 8.1% through 2027, driven by rising health awareness and casualization of workwear. Deckers’ timing couldn’t be better to capitalize on this trend through strategic store openings and targeted marketing campaigns.
Marketing Muscle and Brand Momentum
Deckers is ramping up its marketing spend, now exceeding 10% of sales—a clear signal that the company is aggressively investing in brand-building. This move aligns with industry best practices, as brands that invest heavily in marketing during downturns tend to emerge stronger when consumer spending rebounds.
Hoka’s momentum in the U.S. remains robust, and despite concerns over tariffs and supply chain disruptions, UBS remains optimistic about the company’s long-term trajectory. This confidence is echoed by recent consumer surveys indicating growing brand loyalty and repeat purchases in the premium sneaker segment.
What Should Investors and Advisors Do Now?
1. Consider Adding Deckers as a Growth Play: With shares trading at a significant discount after a painful selloff, Deckers offers a rare opportunity to buy into a growth company at value prices. UBS’s bullish EPS forecast—potentially reaching $10 by FY28—suggests substantial upside potential.
2. Monitor International Expansion: Investors should watch Deckers’ execution in Asia and Europe closely. Successful penetration in these markets could be a game-changer, driving sustained revenue increases.
3. Watch Marketing ROI: Increased marketing spend is a double-edged sword. Advisors should track how effectively Deckers converts this investment into sales growth and brand equity.
4. Stay Alert to Consumer Trends: The “max cushioning” trend is more than a fad; it reflects a broader shift towards comfort-driven footwear. Deckers’ ability to innovate here will be critical.
What’s Next for Deckers?
Looking ahead, Deckers is positioned to leverage multiple growth vectors simultaneously—product innovation, geographic expansion, and brand investment. If it can execute on these fronts, the stock could outperform broader market indices in the coming years.
For investors, this means keeping Deckers on your radar as a potential core holding in the consumer discretionary space. As UBS’s Sole notes, the company is “significantly undervalued” given its growth prospects, making now an opportune time to consider entering or adding to positions.
Final Thought: A Contrarian Opportunity
In a market often dominated by tech and energy stocks, Deckers represents a compelling contrarian play in footwear and lifestyle. With a strong balance sheet, innovative product lines, and a clear path to growth, it’s a stock that could reward patient investors handsomely.
As of Q1 2024, UBS is not alone in its optimism; Morningstar recently upgraded Deckers, citing similar growth catalysts. Combining insights from multiple reputable sources strengthens the case for Deckers as a must-watch name.
In summary, Deckers Outdoors is not just recovering—it’s reinventing itself. For investors seeking differentiated growth with a consumer-centric twist, Deckers might just be the next big winner to add to your portfolio.
Source: UBS calls Hoka sneaker maker a ‘significantly underappreciated growth stock’