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Deckers Extends Post-Halloween Rally

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Deckers Outdoor (DECK) shares were surging Monday after a research firm said the shoe maker's stock should be purchased, providing further momentum on top of what was already a 26% gain in only the past month.

This undated image provided by Ugg, shows a Dylyn Tall and Short Ugg boot in Chestnut Bomber. (AP Photo/Ugg)

Sterne Agee upgraded Deckers, the maker of brands such as UGG and Teva, to buy from neutral with a $65 target, lifting the stock 7.1% to $41 in recent trading. With 90 minutes gone in the market day, volume in the stock had already surpassed the average for a full session. The firm said it was optimistic about the second half of 2013 for the company owing to its products.

The upgrade continues a run of positive commentary on Deckers, including a recent Seeking Alpha blog post about how the stock could get to $92 and a Wall St. Cheat Sheet item pegging Deckers as a medium-term outperform. (If you want to follow what investors are saying about Deckers and the stock in real time, visit our Market Pulse page on DECK.)

Jefferies, another Wall Street firm, said less than a week ago that it thought Deckers was a very strong name in the retail sector and kept a buy recommendation on the stock, while a Bloomberg piece discussed whether Deckers could be a buyout target. OptionMonster noted huge call option volume in the name on Friday.

You get the idea. Lots of liking the Deckers story at the moment. That said, it's not uniform, not yet at least. Goldman Sachs, another firm to talk about the stock in the last few days, wasn't as upbeat, saying Deckers was a neutral -- and in terms of current ratings, about half of the analysts following the stock are neutral, while the other half are in the buy camp. So even as Deckers is clearly drawing a good bit of interest, it wouldn't be accurate to say herd mentality has kicked in here. Not to say that it won't. At the moment, the average price target is $40.67, according to FactSet.

Deckers Chart

As noted, the last month has been a good one for stockholders, but the longer term not as much. Deckers hit its all-time closing high of $117.66 on Oct. 28, 2011, but from there it's been a steep and rapid decline. Even after the run of the last four weeks, it remains 65% below that best level. For 2012, it's shed almost 50%, and in the three-month period that ended Friday, it was down 21.2%, including the worst close it had recorded in three years, $28.63 on Oct. 31. Since then, though, it's been off to the races.

Looking at simple price-to-earnings ratios, Deckers comes in on the low end of a group of competitors at 10.2. Nike (NKE), using FactSet data, carries a 17.4, and Wolverine World Wide (WWW) and Adidas (ADDYY) are each above 15. Columbia Sportswear (COLM) is nearly 17, but Crox (CROX), which itself got a Sterne Agee upgrade in October, is the outlier that rates cheaper, at 8.8.