We maintain our 12-month price target of $400, based on 22.5x our FY 23 (Mar.) EPS estimate and a premium to the company's 3-year average forward P/E ratio of 21.4x. We lower our FY 22 EPS estimate by $0.40 to $14.70 and maintain our FY 23 EPS estimate of $17.75. DECK posts Q2 FY 22 EPS of $3.66 vs. $3.58, below the $3.90 estimate. The company's revenues grew by 15.8% compared to Q2 FY 21 as the company saw its Hoka brand grow 47.0%. The company also saw operating margin of 17.8%, down 270 bps from 20.5% in the same quarter in FY 21. The company said margins were impacted by higher freight and input costs as global supply chain disruptions persist. The company used higher cost air freight to get some of its products to shelves in the quarter, which was only partially offset by better product mix and lower promotions. We believe the company has strong momentum in its Hoka brand, but with slowing growth in its larger UGG brand and delays for UGG products during its short selling season, we remain neutral.
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