Chicago, IL – February 24, 2025 – Zacks Equity Research shares Deckers Outdoor DECK as the Bull of the Day and Levi Strauss & Co LEVI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corporation NVDA, Advanced Micro Devices, Inc. AMD and Microsoft Corp. MSFT.
Here is a synopsis of all five stocks.
Deckers Outdoor, a Zacks Rank #1 (Strong Buy), is a footwear and apparel company recognized for its premium lifestyle and performance brands. The company designs, manufactures, and sells shoes, sandals, and boots, emphasizing comfort and innovation.
The stock has taken a major hit since reporting earnings in late January. Down over 30% from the recent highs, the stock is coming into a big support level that investors should be eyeing.
Deckers is valued at $23 billion and employs close to 5,000 people.
The company, founded in 1973 and headquartered in Goleta, California, operates a diverse portfolio of footwear and apparel brands catering to both casual and high-performance consumers.
In addition to its well-known UGG, HOKA, and Teva brands, the company also offers relaxed casual footwear through Sanuk, fashion-focused casual shoes under Koolaburra, and previously marketed footwear under the AHNU brand.
Deckers distributes its products globally through a mix of domestic and international retailers, distributors, and its direct-to-consumer channels, which include e-commerce platforms and company-owned retail stores.
The stock has a Zacks Style Score of “A” in Growth, but “D” in Value and Momentum.
Deckers delivered a strong Q3, beating EPS by 15% and revenue estimates. The company raised full-year guidance across the board, projecting FY25 EPS between $5.75-$5.80 (above the $5.62 consensus) and improving its gross margin outlook to 57% or better.
UGG continued to be a standout performer, generating $1.24 billion in revenue (+16.1% YoY), with exceptional holiday sales, strong international demand, and impressive full-price sell-through.
HOKA also posted another quarter of rapid expansion, with sales up 23.7% YoY, reinforcing its position as a high-growth performance brand.
Management reiterated its commitment to disciplined brand management, avoiding excessive promotions to sustain long-term profitability.
Despite the strong report, the stock traded lower due to revenue guidance falling slightly short of estimates ($4.90B vs. $4.93B expected), potential future margin pressure from inflation and FX headwinds, and some weakness in Teva (-6% YoY).
Additionally, inventory levels increased to $577 million from $539 million a year ago, which could raise concerns about demand normalization.
Analysts have lowered their earnings estimates for the upcoming quarter, but continue to raise estimates longer-term.
For the current quarter, earnings estimates went from $0.71 to $0.56 after the earnings report. This is a drop of 21% and a major reason why the stock was sold.
However, for the current year estimates have improved 6%, going from $5.56 to $5.89.
For the next year, analysts now see $6.60, which is up 7% from the $6.14 expected 90 days ago.
Deckers Outdoor Corporation price-consensus-chart | Deckers Outdoor Corporation Quote
While Deckers remains on track for its fifth consecutive year of mid-teens revenue growth, the market may be reacting to some short-term headwinds.
However, with its premium brand positioning, strong direct-to-consumer momentum, and disciplined pricing strategy, Deckers appears well-positioned for continued long-term success.
The stock reached a high of $224 just before earnings but has since dropped 33%, recently trading around $150. It has now returned to a price range where it moved sideways for much of 2024, with the $140-$160 zone acting as former resistance that could now serve as strong long-term support—making it an attractive entry point for new investors looking to buy the dip.
With the 200-day moving average sitting at $170, a relief bounce could test that level in the near term. However, if the stock falls below $135, it may signal deeper underlying issues that could lead to further downside.
Deckers Outdoor has faced a sharp pullback despite delivering strong Q3 results and raising full-year guidance. While near-term concerns around revenue guidance, margin pressures, and inventory buildup have weighed on the stock, the company remains well-positioned for long-term growth.
With UGG and HOKA driving strong sales and analysts raising longer-term earnings estimates, the recent selloff could present a compelling buying opportunity at key technical support levels.
Investors with a long-term perspective may find the current dip an attractive entry point into a high-quality, growth-focused footwear leader.
Levi Strauss & Co is a Zacks Rank #5 (Strong Sell) that is an American clothing company best known for its denim jeans, particularly Levi's brand jeans.
The company had previously been privately held for many years, but in 2019, it re-entered the public markets by offering shares on the New York Stock Exchange under the ticker symbol LEVI.
The stock debuted at an opening price of $22, but it has struggled to gain momentum over the past five years, with the price currently trading below $19. A recent earnings report has led analysts to revise their earnings estimates downward, further complicating the case for investing in the stock.
Founded in 1853, Levi pioneered blue jeans and remains a global leader in denim apparel. In addition to jeans, Levi Strauss produces jackets, shirts, and other casual wear under brands like Levi's, Dockers, Denizen, and Signature by Levi Strauss & Co. The company operates both direct-to-consumer retail stores and wholesales its products worldwide.
LEVI is valued at $7 billion and has a Forward PE of 14. The stock holds Zacks Style Scores of “A” in Growth, but “D” in Momentum. It also has an “C” in Value with a Forward PE at 14.
Levi Strauss reported better-than-expected Q4 earnings, beating EPS by 4%. However, the company guided for FY25 earnings below consensus, with adjusted EPS projected between $1.20 and $1.25, compared to the $1.36 expected by analysts. Revenue is also expected to decline by 1% to 2% year-over-year.
While the company highlighted improvements in profitability, including a 13.4% adjusted EBIT margin and a 61.3% gross margin driven by lower product costs and better sales execution, the outlook for FY25 suggests slower growth.
Additionally, despite the strong cash flow and organic revenue growth in Q4, the weak revenue guidance and inventory drop of 4% year-over-year may signal potential headwinds.
Since reporting earnings, LEVI has seen its earnings estimates lowered by analysts.
For the current quarter, forecasts have dropped 15% over the past 30 days, from $0.33 to $0.28.
Looking at the current year, estimates have declined 8% in that same period, down from $1.39 to $1.27.
For the next year, projections have been adjusted downward by 5%, now at $1.39 from $1.47.
It is a troubling sign when the stock is trading below its IPO debut price from five years ago. This indicates negative growth, suggesting that investors have been unimpressed with the company's performance since going public.
Looking at levels, $24.34 is the 52-week high, while $15.62 is the 52-week low.
The stock is trading under the 200-day MA at $19, but above the 50-day at $17.80. A break below that 50-day would likely bring about a test of the recent low.
Levi Strauss faces significant challenges despite its strong brand heritage and global presence. The stock has failed to gain momentum since its IPO, currently trading below its debut price, and recent earnings reports and downward revisions to earnings estimates suggest a lack of investor confidence.
LEVI faces headwinds that make it a challenging investment, particularly for those seeking growth or momentum in the near term.
NVIDIA Corporation’s leadership in the data center computing market, fueled by significant investment in artificial intelligence (AI) infrastructure, provides a strong long-term advantage.
Yet, rival Advanced Micro Devices, Inc. closely trails NVIDIA and could potentially close the gap with a next-generation innovation. In this context, let’s explore the better investment choice –
DeepSeek’s claim that it can build large language models (LLM) at only $5.6 million disrupted the AI landscape. After all, it would only be a fraction of the amount that the top U.S. tech firms spend on computing power to manufacture their AI models.
DeepSeek’s cost-effective LLM development claim impacted NVIDIA, whose graphic processing units (GPUs) are crucial for the AI infrastructure buildout in the tech space. However, this won’t significantly affect NVIDIA as lower costs will drive more use of computing power, a boon for the magnificent-7 stock. Furthermore, NVIDIA has ample resources to shift to more cost-friendly products, enriching the AI ecosystem.
Despite DeepSeek’s low-cost model, the likes of Microsoft Corp. are spending billions on AI infrastructure, highlighting NVIDIA’s strong growth potential. NVIDIA’s cutting-edge Blackwell chips are gaining popularity among major tech players, boosting growth. These chips offer a quicker AI interface and better energy efficiency (read more: Buy NVIDIA Stock, DeepSeek's Threat is Exaggerated).
AMD, meanwhile, has immensely benefited from its strategy to focus more on the data center business and help clients implement AI. Last year was transformative for AMD, with annual data center revenues almost doubling due to increased adoption of its EPYC processor.
In the current year, AMD’s outlook is promising with its recent acquisitions of Silo AI and ZT Systems, which will help customers develop AI systems. Lest we forget, AMD is a front-runner in PC central processing units with a strong moat due to its know-how and x86 architecture license.
Both NVIDIA and AMD stocks show promising growth, but if you have to choose anyone, it has to be NVIDIA, hands down. This is because the industry has widely adopted NVIDIA’s CUDA software platform over AMD’s ROCm software platform. The CUDA X has given NVIDIA a strong competitive advantage, while the company’s dominant position in the expanding GPU space has created a wide moat.
Moreover, developers are likely to stick with CUDA due to the cumbersome infrastructure transitions, keeping AMD behind NVIDIA in the data center race for now. Talking about data center revenues, AMD’s $3.9 billion in the fourth quarter of 2024 pales next to NVIDIA’s $30.8 billion in the fiscal third quarter ending on Oct. 27. NVIDIA is set to report its fiscal fourth-quarter results on Feb. 26.
NVIDIA, anyhow, generates profits more efficiently than AMD. NVIDIA’s net profit margin of 55.7% is higher compared to AMD’s 6.4%, showing a high margin.
NVIDIA, thus, rightfully has a Zacks Rank #2 (Buy). AMD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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