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UPDATE: Wells Fargo Initiates Coverage On Deckers

Erika Janowicz

Wells Fargo analyst Evren Kopelman initiated coverage on Deckers Outdoor (NYSE: DECK) with an Outperform rating and $92.00 to $98.00 valuation range.

Kopelman noted the sales momentum for several of Deckers brands including the strong demand for UGG this past winter and the diversification of the product line. The analyst sees the diversification driving 11 percent sales growth in FY2015.

Wells Fargo added, “Sanuk, Teva and Hoka, are also showing accelerating sales growth, driven by increased distribution and marketing; we estimate 23% sales growth for them combined in FY2015. In addition, improvements in China, new international partner store strategy, and bringing Germany in-house could be accelerators in the next few years.”

The analyst further remarked that lower production costs and investment leverage could accelerate EPS growth and operating margin expansion. Deckers has a “strong” balance sheet with $7.00 per share in cash and no debt.

Wells Fargo's FY2015 and FY2016 EPS estimates are $4.63 and $5.42, respectively.

Shares of Deckers closed at $80.86 on Thursday.

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