Citi Turns Bullish On Deckers Outdoor, Highlights Strength Of Hoka Brand

Citi analysts turned bullish on Deckers Outdoor Corp DECK stock as its Hoka brand is underappreciated.

The Analyst

Paul Lejuez upgraded Deckers Outdoor from Neutral to Buy with a price target lifted from $180 to $230.

The Thesis

Shoe company Deckers might be best known for its UGG brand, but its fast-growing running shoe brand Hoka is on track to generate $400 million of sales next year, Lejuez wrote in the note. On a standalone basis, the Hoka brand would be valued at around $2.8 billion and implies the remaining brands are trading at an "attractive" 5.6 times EV/EBITDA.

As such, Lejuez said the Hoka brand represents "hidden value" within Decker's current valuation.

First-hand checks and industry data points suggest Deckers benefited from another strong holiday season for its UGG brand despite an otherwise "lackluster" performance in the broader cold weather category, the analyst said.