Wedbush downgraded Deckers Outdoor (NASDAQ: DECK) from Outperform to Neutral with a $45 price target citing valuation ahead of Q4 results on 2/28.
Analyst Corinna Freedman views valuation as a less favorable risk/reward scenario heading into the 4Q print. Shares are trading within 1% of their target valuation and they are stepping to the sidelines given uncertainty surrounding guidance.
The analyst is comfortable with their conservative $2.60 estimate, which is $0.02 below consensus, although finds it "difficult to discern the market’s expectations for 2013 guidance, which we believe is likely to have a more significant impact on the shares and, given mix shifts towards lower priced transitional styles, is more difficult to estimate."
The transitional styles are in addition to the traditional UGG boots. She already stated in earlier notes that UGGS are still in trend. Final price per pair of boots is down but sheepskin whole sale price will be down in 2013, premium stores will buy more in wholesale because the cold weather this year so that they don't want to under stock in case we have another cold weather in 2014. Expectation is already super low, with the big short interest, the reward and risk favors reward. Unless they have a big miss, even they do not beat or guide high, DECK will trade at $40 range for a while, if, they beat and have a positive note, then $50 is not a problem. For Corinna Freedman, her statement are all true but she didn't say it is a sell, all she tells us is that with the big run up currently, you need to wait and watch the earnings before adding more.