Goldman Sachs Upgrades Deckers Outdoor, Lowers Price Target By $5

Goldman Sachs on Monday upgraded Deckers Outdoor Corp DECK from Neutral to Buy based on the company's investments in the supply chain, distribution and product development. Analysts did lower Deckers Outdoor price target from $95 to $90, citing risks such as concentrated seasonality and weather sensitivity. Analysts wrote, “Classic boots accounted for less than 30% of UGG sales in calendar 2014 versus close to 50% five years ago. Supply chain innovation through UGGpure has enabled the company to develop a broader set of products at sharper price points, a strategy that has been met with positive reception by wholesale accounts.” “While we consider UGG to be a seasonal staple, its concentration of sales and EBIT in calendar 4Q (fiscal 3Q) is extremely high (nearly 100% of the year's EBIT is generated in calendar 4Q). We believe this high degree of seasonality, in combination with fashion risks, creates a year-to-year volatility. Further, it creates challenges to management's ability to plan and guide its business, as we witnessed this past quarter.” Shares of Deckers Outdoor closed Friday at $66.05.