Decker Outdoor shares climbed +4% Tuesday, on a rating upgrade by the Bank of America Merrill Lynch.
Bank of America analysts raised their rating on the footwear company’s stock to buy from neutral. Analyst Rafe Jadrosich also upped his price target to $180 from $150.
In a note to investors, Jadrosich mentioned earnings per share growth opportunity from Decker’s share buybacks, and low-to-mid single digit revenue growth (largely driven by the company’s HOKA brand) as factors behind the analyst’s optimism. According to the analyst, HOKA is expected to grow +40% in fiscal year 2019, thanks to new product offerings and market share gains in the running specialty segment.
Jadrosich believes that gross margin of Decker’s brand UGG could be at its peak, and that there is operating margin opportunity from cost savings and improving HOKA margins.