Wedbush Thinks Deckers Is Ready to Keep Running

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While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Deckers Outdoor (NYSE: DECK  ) popped 4% today after Wedbush upgraded the shoemaker from neutral, to outperform.

So what: Along with the upgrade, analyst Corinna Freedman boosted her price target to $74 per share (from $54), representing about 16% worth of upside to its Thursday close. Wedbush said that management's tone at a recent meeting was particularly positive, giving the analyst some comfort over its near-term sales estimates, long-term profit assumptions, and outlook for the UGG brand.

Now what: While Wedbush acknowledged that the call is a bit speculative, the stock's general risk/reward trade-off is certainly more attractive. "Over the longer term, we are incrementally more comfortable with our previous assumption of $5.00 in earnings power and our model now assumes that DECK could realistically achieve this by fiscal 2016," wrote Freeman in a note to investors. When you couple Deckers' red-hot stock price -- now up 130% from its 52-week lows -- with the competitive and inventory risks that remain, however, I'd hold out for a wider margin of safety before buying into that bullishness. 

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DocumentId: 2657019, ~/Articles/ArticleHandler.aspx, 9/28/2016 11:26:42 PM

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Related Tickers

9/28/2016 4:02 PM
DECK $60.93 Down -0.48 -0.78%
Deckers Outdoor CAPS Rating: ****