Goldman Sachs Starts Deckers Outdoor (DECK) at Neutral; Earnings Trough Hard to Time
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Price: $90.11 -3.2%
Rating Summary:
23 Buy, 21 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
Rating Summary:
23 Buy, 21 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
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Goldman Sachs initiates coverage on Deckers Outdoor (NASDAQ: DECK) with a Neutral. PT $32.00.
The firm notes 3Q12's disappointing report leads them to question whether the company's massive earnings slide is being driven by something more ominous than the cyclical impact from mild weather, sheepskin inflation, and international headwinds. "Most concerning were the traffic declines at the company’s owned stores (which already do an impressive $1,700 per square foot and 20%-plus operating margins) and customer resistance to price increases," the analyst notes.
Goldman also said price resistance and competition disconcerting. In addition, earnings risk entering key winter season despite easier comparisons. "While guidance has been revised down yet again, we find it hard to believe that the earnings cycle has finally troughed. We see the greatest risk in management's UGG wholesale growth of 0% (vs. down 15% in 3Q12). Other risks include more classics price adjustments and prolonged same-store sales declines," the analyst comments.
While UGG should survive the storm, the earnings trough is hard to time, Goldman said.
For an analyst ratings summary and ratings history on Deckers Outdoor click here. For more ratings news on Deckers Outdoor click here.
Shares of Deckers Outdoor closed at $35.25 yesterday.
The firm notes 3Q12's disappointing report leads them to question whether the company's massive earnings slide is being driven by something more ominous than the cyclical impact from mild weather, sheepskin inflation, and international headwinds. "Most concerning were the traffic declines at the company’s owned stores (which already do an impressive $1,700 per square foot and 20%-plus operating margins) and customer resistance to price increases," the analyst notes.
Goldman also said price resistance and competition disconcerting. In addition, earnings risk entering key winter season despite easier comparisons. "While guidance has been revised down yet again, we find it hard to believe that the earnings cycle has finally troughed. We see the greatest risk in management's UGG wholesale growth of 0% (vs. down 15% in 3Q12). Other risks include more classics price adjustments and prolonged same-store sales declines," the analyst comments.
While UGG should survive the storm, the earnings trough is hard to time, Goldman said.
For an analyst ratings summary and ratings history on Deckers Outdoor click here. For more ratings news on Deckers Outdoor click here.
Shares of Deckers Outdoor closed at $35.25 yesterday.
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