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Deckers Trends Up On FQ2 Beat; Analysts Upgrade, Boost Targets

John Seward

Deckers Outdoor (NYSE: DECK) strong second-quarter results impressed investors, with shares trading up nearly 10 percent to $93.50 in pre-market action Thursday.

The maker of UGG boots and Teva sandals posted a narrower-than-expected net loss for its fiscal first quarter, while its 24 percent revenue growth handily beat Street views.

Although the slowest period for Deckers, its guidance boost for fiscal 2015 suggests strong confidence for the upcoming fall-winter season.

Jefferies' Randal J. Konik took a big leap on the stock Thursday, upgrading from Hold to Buy and boosting his price target from $78 to $130. Konik said the Street "under-appreciates" the potential for profit growth.

Recent results "set up a strong acceleration for the fall," Canaccord's Camilo Lyon said in a note reiterating a Buy rating and raising his target from $103 to $106.

Citi's Corinna Van der Ghinst said spending on marketing and direct-to-consumer sales will help insure "long-term, sustainable growth." Citi maintained a Buy and boosted its target from $94 to $105.

Decker's net loss for the recent period widened to $37.1 million or $1.07 pershare, from $29.1 million or $0.85 a share in 2013; sales grew 24.3 percent from $170.1 million to $211.1 million in the year-earlier period.

Analysts had forecast a loss of $1.28 on a 13 percent revenue gain to $192 million.

Deckers expects fiscal second-quarter earnings of $0.98 per share, up from $0.95 per share a year earlier. It expects revenue to jump 18 percent to $456.3 million from a year earlier's $386.73 million.

Wall Street forecasts second-quarter earnings of $1.13 per share, on revenue of $441.2 million.

The company added a point to its fiscal 2015 forecast and now expects earnings will grow 14.5 percent while revenue increases 14 percent.

In the recent period, UGG sales rose 22.8 percent to $123.3 million; Teva sales increased 25.7 percent to $39.3 million, while Sanuk were up 19.6 percent to $36 million.

Domestic sales increased 20.1 percent to $132.3 million and international sales increased 32.1 percent to $79.2 million.

Inventories at June 30, 2014 fell 1.7 percent to $356.0 million from $362.1 million.

Shares of Deckers recently traded at $91.27, up 7.09 percent.

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