News

Shares of Deckers Outdoor (NYSE: DECK) dropped on Thursday after an analyst downgraded their outlook for the stock. Coincidentally, the company released a product update with its popular Hoka brand, but it didn't move the needle. As of 10:15 a.m. ET, Deckers stock was down 7%.

A new shoe line didn't encourage investors today

Deckers stock has performed incredibly over the last five years, rising over 400%. The success of its Hoka brand is a big part of this. In its fiscal third quarter of 2024 (which ended in December), Hoka sales surpassed $400 million and accounted for nearly 28% of the company's total sales.

This morning, Deckers announced its latest Hoka running shoe line, the Skyward X. It could help the brand keep growing, but that's not what investors are thinking about this morning.

Rather, investors are thinking about comments from Bank of America analyst Christopher Nardone. Previously, Nardone recommended buying Deckers stock but now he's shifting his outlook to more neutral, according to StreetInsider. This is causing some investors to rethink their positions.

Deckers stock has gone up really fast

In fairness, Deckers stock is up over 60% in just the past year, which is a red-hot performance for a single year. This rapid price appreciation has pushed the price-to-sales valuation of Deckers to over 5. For perspective, it's traded at about half of this valuation over the last five years.

Deckers owns shoe brands that are growing in popularity and the business turns a nice profit. But its valuation is reaching historically abnormal levels so there may be some validity in Nardone's more neutral near-term outlook.

Longer-term, Deckers' success may be tied to its ability to continue expanding in international markets. Right now, its international business is about half of the size of its domestic business. But sales in international markets are growing at a faster pace, which is encouraging.

Deckers is expected to report quarterly financial results next month.

Should you invest $1,000 in Deckers Outdoor right now?

Before you buy stock in Deckers Outdoor, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Deckers Outdoor wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

*Stock Advisor returns as of April 22, 2024

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.