Will This Upgrade Help Deckers Outdoor (DECK) Stock Today?

NEW YORK (TheStreet) -- Deckers Outdoor (DECK) shares were upgraded to "neutral" from "underperform" by analysts at Credit Suisse  (CS) on Monday. The firm set a $82 price target on the shares.

Credit Suisse cited international and retail growth as reasons for the upgrade.

"Results were robust across geographies and channels, with the outlook for continued top-line and earnings growth; this suggests that recent (aggressive) investments in owned retail and international will ultimately generate higher returns than previously anticipated," said the analysts.

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Separately, TheStreet Ratings team rates DECKERS OUTDOOR CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DECKERS OUTDOOR CORP (DECK) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, DECK's share price has jumped by 32.94%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DECK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 11.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • DECK's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.87, which clearly demonstrates the ability to cover short-term cash needs.
  • 48.95% is the gross profit margin for DECKERS OUTDOOR CORP which we consider to be strong. Regardless of DECK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DECK's net profit margin of -0.91% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: DECK Ratings Report
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