Jefferies recommended buying shares of Hoka's parent company. The brand could replicate UGG's success.

Jefferies analyst Blake Anderson recommended buying shares of Deckers Outdoor, which owns the UGG and Hoka brands. He upgraded the company’s rating from “hold” to “buy” and raised the price target from $110 to $130, according to CNBC. The new target implies a 21% increase from the closing price on Monday, July 13. The investment bank sees the main driver of growth in the new positioning of Hoka sneakers—a dual focus on professional athletes and everyday lifestyle.

Jefferies believes that the shares of the American footwear and apparel manufacturer could gain momentum thanks to the diversification of its product lineup—primarily in the Hoka sneaker line.

“We see growth potential on the horizon for more than a year. It all depends on the success of product innovations, and the early signs are encouraging,” the analyst noted. In his view, Hoka is successfully diversifying its brand while simultaneously strengthening its position in the athletic footwear segment and expanding into the casual market, where the company’s experience in developing UGG could be an asset. The sheepskin boot manufacturer has managed to transform functional footwear into a fashionable lifestyle brand with high customer loyalty.

Over the past year, Deckers Outdoor’s stock price growth has lagged significantly behind the S&P 500 broad-market index—according to CNBC, this modest performance was due specifically to a slowdown in Hoka sales caused by delays in updating the product lineup.

The TV channel notes that the manufacturer is now trying to rectify the situation. The brand recently introduced the Clifton Pro running shoes, designed for professional runners, in contrast to the brand’s earlier, more basic designs.

“We are optimistic about the company’s market segmentation efforts, which could drive accelerated sales growth. Although this process is just beginning, last week’s launch of Clifton Pro marked an important milestone,” Anderson emphasized.

That said, while Hoka’s prospects remain a topic of debate in the market, the UGG brand may prove to be more resilient than the consensus suggests, according to the analyst. This will provide additional support for the parent company’s stock.

During trading on July 13, Deckers’ stock price rose 1.7%. Since the start of the year, the company’s shares have risen by only 4% and are trading at a significant discount to their 52-week high of $126.5, notes Investing .com. This makes Deckers’ valuation more attractive to investors reassessing the risk-reward ratio, the publication believes.

According to MarketWatch, the Wall Street consensus forecast for these stocks is moderately optimistic. Of the 28 analysts tracking them, 15 recommend buying the stocks. Another 11 experts advise holding positions, and only two recommend selling.

This article was AI-translated and verified by a human editor