Shares of UGG brand owner could add 32% - UBS. What keeps his optimism alive?

After a sharp slump in Deckers Outdoors - owner of clothing and footwear brands UGG, Hoka and Teva - a UBS analyst saw a chance for a rebound: his new target price implies a rise in the stock by about a third. UBS expects accelerating earnings growth, expanded product range and geographic footprint, and increased marketing. However, not all analysts share this view: last week one of them recommended selling the stock, pointing to weakness in its own sales and pressure from duties.

UBS saw a good time to buy shares of footwear manufacturer Deckers Outdoors, which owns the brands Ugg, Hoka and Teva, writes CNBC. The company's shares have lost 41% of their value since the beginning of the year, but the bank's analyst Jay Saul has set a target price for them at $158: this implies an increase in securities by almost 32% relative to the close on Friday, August 29 (on Monday, September 1, trading in the U.S. was not held because of Labor Day).

"We see a great buying opportunity in a growth stock that is now markedly undervalued by the market," Saul wrote.

One of the reasons the analyst cited for raising the target price was the increased likelihood that Deckers will be able to grow its earnings in the coming years.

"In our model for fiscal 2028, we expect EPS of $7.9, but our optimistic $10 scenario is now more likely to materialize. Deckers has several growth drivers that combine to form a more compelling outlook than we had previously assumed," Saul emphasized.

Saul pointed specifically to the high potential for increasing sales of Hoka sneakers. There are new opportunities to enter adjacent segments, he said, and there is also significant potential for expansion in Asia and Europe, as well as increasing the number of Hoka stores around the world.

In addition, Saul pointed out that Deckers has ramped up marketing spending to more than 10% of revenue. Hoka's popularity in the U.S. remains strong, and the risks associated with duties do not diminish his optimism about the brand's long-term story. He added that the "max cushioning" shoe trend that Hoka is associated with is well positioned to remain in demand with consumers for a long time to come.

Deckers Outdoor shares were down about 1.4% at the premarket on Tuesday, Sept. 2. The stock has gained 12% in the past week amid the launch of Teva's fall/winter 2025 collection focused on all-season outdoor research, Simply Wall St. writes.

An additional driver was a collaboration with designer Sean Wotherspoon that reimagined classic Teva models: it has the potential to capture customers' attention, the publication believes.

Last week, analyst Gary Alexander, quoted by SeekingAlpha, recommended selling Deckers Outdoor shares amid weak same-store sales, duty pressure on gross margins and intense competition in all key product categories. The analyst explained that the company is increasingly relying on wholesalers for growth, while sales at its own stores are weakening, which is the catalyst for the margin decline.

A total of 27 analysts have rated Deckers shares, and their opinions are divided: 13 analysts advise to buy the securities (Buy and Overweight ratings) and hold them (Hold). One more analyst thinks that the securities should be sold (Sell).

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