After being labeled one of the worst performers in the S&P 500 this year, Deckers Outdoor is suddenly attracting significant attention from major institutional buyers. Recent filings reveal that the Swiss National Bank and Edmond de Rothschild substantially increased their holdings during the second quarter, suggesting that sophisticated investors view the current valuation as a compelling entry point. But does this “smart money” bet on a recovery have merit?
Compelling Valuation Attracts Big Players
The data reveals a clear trend of accumulation. The Swiss National Bank boosted its stake by 7.2%, bringing its total holding to 459,400 shares. Meanwhile, Edmond de Rothschild executed an even more aggressive purchase, expanding its position by 36.8%. These moves indicate that seasoned market participants consider the stock’s decline of more than 60% since the start of the year to be overdone. This sell-off has compressed the price-to-earnings ratio to just 13, which is nearly half of its historical average of 23.
Not all major investors are aligned, however. American Century Investments scaled back its exposure, yet it maintains a substantial $98.1 million stake in the footwear company. This divergence in strategy highlights the conflicting opinions on Deckers’ future prospects.
Strong Brands Navigate Tariff Headwinds
The primary driver behind the stock’s dramatic drop has been market apprehension over potential new U.S. tariffs on imports from Vietnam, a key production location for Deckers. Proposed duties ranging from 20% to 46% threaten to compress the company’s gross margins. Deckers has already adjusted its 2026 gross margin forecast down to 56%, a two-percentage-point reduction from its previous outlook.
Should investors sell immediately? Or is it worth buying Deckers Outdoor?
Despite these macroeconomic concerns, the underlying strength of the company’s brand portfolio remains intact. In the last quarter, HOKA recorded an 11% revenue increase, while UGG sales grew by 10%. Although this represents a moderation from the explosive growth of prior years, consumer demand is clearly not collapsing.
Market Experts Foresee Significant Upside
Even amidst the recent downturn, financial analysts have maintained their bullish price targets. The consensus average price target sits around $117.58, implying a potential upside of nearly 40% from current trading levels. The firm Stifel recently upgraded the stock to a “Buy” rating, citing an attractive risk-reward profile.
Deckers’ solid balance sheet, featuring $1.4 billion in cash and zero debt, provides a significant buffer against market pressures. The upcoming holiday shopping season will be a critical test, revealing whether its brands can resonate with consumers despite a strained economic environment—and whether the institutional investors betting on this underdog will be proven correct.
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