Why Deckers stock is down today

Actions of Deckers (DECK -5.37%) they were moving lower today. The culprit was an analyst downgrade as one Wall Street watcher downgraded the fast-growing owner of Hoka and UGG.

Shares of Deckers were down 6% as of 12:08 a.m. ET on the news.

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The port turned sour on Deckers

Seaport Research cut its rating on Deckers from buy to neutral this morning, seeing less upside potential in the stock after recent gains and a boost to moderate Hoka and UGG.

Citing Google Trends data, the research firm said interest in Hoka and UGG was not as strong during the back-to-school season and that other running shoe brands such as Asics and Brooks are starting to regain market share.

Seaport did not give a price target for the downgrade.

Is Deckers in trouble?

Consumer products such as shoe brands are notorious for being trendy, and it will be difficult for Deckers to maintain its momentum in Hoka, which now accounts for more than half of the company’s long-term sales. Hoka’s growth rate has slowed but remains strong.

Hoka’s sales rose 59% to $1.41 billion in fiscal 2023, which ended March 31, 2023, and 28% in fiscal 2024. In its fiscal first quarter, that growth rate improved up 30% to $545 million, potentially showing some stability.

However, NIKE said it was regaining momentum in the running category in its recent earnings report, and other brands are likely responding to Hoka’s dramatic growth in recent years.

Deckers shares look reasonably valued at a price-to-earnings ratio of 30, but maintaining the strong performance of the Hoka brand will be the biggest key to its success. At this point, it’s unclear whether the data points referenced by Seaport are significant enough to change that momentum, but investors should keep an eye on Hoka’s growth rate.