Deckers is the IBD Stock Of The Day as it sprints past a buy point to a new high amid robust earnings and a positive analyst initiation.
Maker Of Hoka Shoes Started At Buy
On Friday, analysts at Needham initiated coverage of Deckers Outdoor stock with a buy rating and 218 price target. That suggests more upside for DECK stock, which already sits on a nearly 72% rally so far in 2024.
In late October, the Hoka shoe maker and Ugg shoe maker cleared an early entry after smashing earnings expectations for its second quarter.
Though Deckers is a shoe manufacturer, its fortunes are tied to retail. Retail earnings and holiday outlook have been generally solid, with Walmart a standout this season. On Friday, Gap and Ross Stores made powerful earnings gap-ups, before trimming gains.
Deckers Stock Gaps Up
Shares of Deckers Outdoor gapped up 5.6% to 192.15 on the stock market today, hitting an all-time high. Deckers stock topped a 182.26 buy point from a cup-with-handle base, according to MarketSurge pattern recognition. The buy zone runs to 191.37.
The relative strength line for DECK stock is rising fast but remains below the peak of the base for now. An RS line moving to new highs along with the Hoka sneaker maker's shares would send a positive sign. A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the chart provided.
The current base shows symmetry and hints of institutional accumulation, according to the IBD markets team. The up/down volume ratio is highly favorable at 1.7.
IBD added DECK stock to Leaderboard as it gapped up above the 10-week line on earnings to seize an early entry. That move came as Deckers delivered stronger-than-expected Q2 earnings and helped to set up Friday's breakout. The Hoka shoe maker is also on SwingTrader.
On Holding, the Swiss manufacturer of the popular On Cloud shoes, can be found on the IBD 50 list of top growth stocks.
ONON stock popped 3.4% on Friday to a new high. Shares rebounded from their 50-day line this week and ran back through a buy zone.
Deckers Outdoor Earnings
The IBD Stock Checkup tool shows that DECK stock is currently the No. 2 shoe and apparel manufacturer, behind only ONON stock, in terms of its Composite Rating, which rolls various fundamental and technical metric into one easy-to-use score.
In terms of key IBD ratings, Deckers Outdoor earns a Composite Rating of 91, RS Rating of 86 and EPS Rating of 99, all out of a best-possible 99.
Earnings growth averaged 57% over the past three quarters, above the three-year rate of 33%. Further, Deckers boasts eight quarters of rising fund ownership.
On Oct. 25, Deckers posted a 39% earnings per share jump for the fiscal second quarter, far outpacing views, as revenue rose 20%. Though robust, growth on both the top and bottom lines slowed from the prior quarter.
Hoka shoe sales continued to drive growth, soaring 35%. UGG sales rose 13%.
For the full year ending in March 2025, analysts project Deckers earnings will grow 14% per share. That would compare to a 50.5% jump last fiscal year. Analysts expect Deckers to see earnings weakness in the second half of this year.
But on Friday, equity research firm Needham initiated coverage of Deckers stock with a buy rating, saying that second-half guidance "looks extremely conservative."
Why Needham Thinks DECK Stock Is A Buy
Deckers is "one of the highest-quality companies in our coverage," the Needham analysts told investors, according to TheFly.com. They cited a strong, multiyear performance record, two of the strongest shoe brands in Hoka and Ugg, a stellar management team, and a fortress balance sheet. Finally, the analysts said they see the potential for shares of DECK stock to "continue grinding higher."
Meanwhile, investors continue to watch the state of consumer financial health amid inflation. Retailers are bracing for President-elect Donald Trump's tax and tariffs policies, which could boost consumer spending and fuel inflationary pressures.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
