Footwear Pair Trades From Morgan Stanley, UGG Boots Are A 'Top Holiday Gift'

Morgan Stanley issued an analyst note Monday and proposed a pair trade in branded apparel and footwear along with comments on companies in the sector.

Analysts Jay Sole and Joseph Watt commented that their favorite pair trade ideas included:

Nike Inc NKE over Under Armour Inc UA

Deckers Outdoor Corp DECK over Wolverine World Wide, Inc. WWW

Skechers USA Inc SKX over Steven Madden, Ltd. SHOO

Foot Locker, Inc. FL over DSW Inc. DSW

Sole also believed that “athletic footwear remains one of the mall’s best categories and [Decker’s] UGG boots are a top Holiday gift.”

The analyst note also mentioned that “Journey's +13 percent 4QTD comp suggests UGG boots are selling well: [Genesco Inc. GCO] reported on 12/5 very solid 3Q and 4QTD Journey’s sales trends and UGG is the key Journey’s brand. DECK’s 12/2 analyst meeting was a second positive data point. The presentation revealed DECK is making good progress extending the UGG brand into new categories in our view.”

Commenting on Sketchers, Soled continued “to believe SKX domestic same store sales are trending at a positive mid-to-high single digit rate. SCVL’s positive SSS surprise and 19 percent stock price jump over its 12/1 EPS report indicate family channel trends remain strong. SKX also has more long-term EPS upside than the Street realizes in our view, especially from international operations.”

The firm maintained Overweight ratings on Deckers Outdoor and Sketchers.

Deckers Outdoor Corp recently traded at $97.98, down 0.60 percent.

Skechers USA Inc. recently traded at $60.68, down 0.12 percent.