Baird downgrades Deckers, Crocs, flags Under Armour as new trading idea

Investing.com -- Baird downgraded Deckers Outdoor and Crocs to Neutral, saying recent share price rallies have reduced near-term upside, while adding Under Armour Inc A (NYSE: UAA) as a short-term trading idea which has a higher-beta opportunity.

Deckers and Crocs were both downgraded after strong rebounds since mid-November, with Deckers up about 35% and Crocs up roughly 20%. Baird said each stock now offers less than 20% upside to its price target, lowering confidence in further gains over the next few quarters.

Baird kept a positive view on the sector overall, despite sharp underperformance in 2025. Branded names in its coverage fell an average of 13% last year, trailing the S&P 1500, as valuation compression more than offset earnings growth.

The firm expects earnings momentum to improve as 2026 progresses, helped by easier comparisons, tax refund tailwinds supporting early-year spending and margin improvement as pricing and tariff mitigation actions take hold, particularly in the second half.

Under Armour was named a Bullish Fresh Pick through the end of May, despite retaining a neutral rating longer term.

Baird said the stock has high leverage to a better near-term macro setup and is showing signs of a fundamental bottom. It also pointed to improving e-commerce indicators, low investor sentiment and a large disclosed stake by Fairfax, which it said could support sentiment.

Baird acknowledged risks tied to a slowing labour market, weaker consumer confidence and higher rates, but said there is room for error even after a recent bounce in the group.

It added that valuations remain attractive versus historical averages, which could draw investors back to lagging consumer sectors.

Baird highlighted On Holding, VF Corp and Nike as preferred higher-beta opportunities heading into 2026, all Outperform rated.

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