2/26/2013 Jefferies reiterated its Buy rating and $60 price target on Deckers Outdoor (NASDAQ: DECK) ahead of Q4 results on Thursday, February 28 (after the close) and gave 10 potential reasons to own the stock. The stock remains their #1 pick.
The firm's 10 reasons to stay on DECK:
1) Just Don't Miss By A Country Mile And Don't Guide Way Below. Street forecasts 4Q sales of $624M / EPS of $2.62. For FY'13, Street estimates sales of $1.487B / EPS of $3.71.
2) Inventory In Better Shape. DECK inventories were up over 100% a yr ago. While inventories will still be elevated, we expect an improvement to +20% YoY.
3) Retail Comps Better Than Expected. DECK guided 4Q retail comps down 11%, which we view as conservative. We think retail comps are likely to come in down HSD%.
4) Classic Product Sales Stabilizing. We think sales of classic UGG sheepskin products are likely stabilizing and believe this news would be viewed favorably.
5) Sell Through Improved As Weather Cooled. Mgmt has consistently discussed strong correlation between temp and sales; a continuation of this trend would be a positive.
6) Margin Outlook Has Improved. DECK has a much improved margin outlook in 2013 with lower sheepskin costs alone expected to be a ~150bps GM% tailwind.
7) Back Log Improving. We expect the Fall 2013 order back log to show an improving trend as cold weather sell through was better this year than in the prior year.
8) New Product Favorably Received. UGG has introduced new and innovative twists on the classic product, we believe this newness will help drive sales in the coming qtrs.
9) Online Trends Continue to Stabilize. Recent online data have shown stabilization
of the UGG brand. A continuation of this trend would show the brand is far from dead.
10) Potential For Share Repurchases. We think DECK could potentially begin repurchasing shares which would be a positive to investors.