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What Happened?
Shares of footwear and apparel conglomerate Deckers (NYSE:DECK) fell 16.8% in the morning session after the company reported mixed fourth quarter results: its full-year revenue guidance slightly missed even though the company raised it. The sales guidance suggested a steady slowdown in growth to the mid-teens. On the other hand, Deckers blew past analysts' constant currency revenue and EPS estimates. Overall, this quarter had some key positives, but the market was expecting even better results.
Following the results, TD Cowen analysts John Kernan and Krista Zuber cut their price target from $244 to $199 and reiterated a Buy rating, noting "how the sales guidance indicates a year-over-year decline of 2.5% in the fourth quarter."
“Management asserted on the call that the Q4 outlook isn’t reflective of any change in demand for either Hoka or UGG but rather a function of some timing factors unique to each brand, the desire to maintain a scarcity model to keep a pull market,” they wrote.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Deckers? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Deckers’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for Deckers and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 14.7% on the news that the company reported a "beat and raise" quarter. Third-quarter results blew past analysts' constant currency revenue expectations. Its revenue also outperformed Wall Street's estimates, benefiting from strong consumer demand for its HOKA and UGG brands.
Looking ahead, the company also raised its full-year guidance for revenue and EPS, capping off a great quarter. Overall, it was an impressive quarter for the company. Skechers, a footwear peer, also reported strong results, suggesting consumer demand for athletic and casual footwear is holding up despite some mixed signals in spend in other categories.
Deckers is down 8.4% since the beginning of the year, and at $187.42 per share, it is trading 16% below its 52-week high of $223.11 from January 2025. Investors who bought $1,000 worth of Deckers’s shares 5 years ago would now be looking at an investment worth $5,890.
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