RBC Capital Markets said Deckers Outdoor Corp.'s (NASDAQ: DECK) late start to spring may provide a lift to first quarter. The company is scheduled to report its first quarter earnings on April 28.

The brokerage maintained its outperform, above average risk rating on shares of Deckers Outdoor with a price target of $108. The brokerage anticipates Deckers Outdoor to earn $0.44 a share on revenue of $201 million for the first quarter versus consensus of $0.45 a share on revenue of $202.41 million and last year's profit of $0.46 a share on revenue of $155.93 million.

Our model assumes sales growth of 29 percent, flat gross margin at 50 percent, and selling, general and administrative expense (SG&A) deleverage of 500 basis points to 36.5 percent. The increase in SG&A is a result of the one-time expenses related to the distribution model transition in Europe and higher legal and marketing costs, said Howard Tubin, an analyst at RBC Capital Markets.

In addition to spring merchandise, Tubin noticed select styles of cold weather UGG boots available for sale throughout the quarter in the Nordstrom stores that he visited. As spring weather was slow to come in several regions of the country, the lasting cooler temperatures may have fueled sales of classic UGG product. This could contribute to modest upside to his first quarter estimate as these are higher price-point items.

In mid-April, Deckers announced that Stephen Murray will take on the role of President, EMEA (Europe, Middle East, and Africa). International (at 24 percent of the business) is a meaningful part of the growth story at Deckers and Murray appears to be an ideal candidate to lead the EMEA business. His experience includes senior roles at Urban Outfitters, Vans and Reef, as well as at Reebok International.

Tubin said the transition to a direct distribution model in the U.K. and Benelux regions, UGG brand expansion into China, and increased marketing investments, particularly to build the men's business, are examples of current initiatives that will likely fuel both top and bottom line growth in the intermediate and longer term.

There is a wide range of estimates for second quarter. Consensus is $0.07, RBC Capital is the low at loss of $0.16 and the high is earnings of $0.26.

Tubin said the second quarter quarter will be impacted by a revenue shift out of second quarter into third quarter due to the distribution model change in the U.K. In addition, SG&A will be up for similar reasons as first quarter.

While the second quarter is the company's smallest, (6 percent of annual profits last year, 3 percent the year prior) and is relatively insignificant, the shares could be weak should management guide below the Street. We'd use any weakness as an entry point, said Tubin.

Tubin said over the last several months, the shares have undergone a re-valuation in the eyes of the market due to the strong momentum in the business, increasing clarity on international expansion, continued roll-out of and strength in company operated retail stores, and tight management of inventory.

Given Tubin's belief that the UGG brand is a standout in the footwear space and that momentum in the business remains strong, he applied a target multiple of 23 to 25 times, which is more in line with the niche softlines peer group average of 24 times.

Tubin believes multiple expansion from current levels is likely based on the continued strength in the UGG brand, multiple opportunities for growth, well managed inventories, potential for acquisitions, a strong balance sheet, and the strong management team. Applying 23 to 25 times to his revised 2011 EPS estimate of $4.50 yields his price target of $108.

Risks to our price target include the following: a slower than anticipated response to the expanded assortment of UGG shoes; difficulty in repositioning the Teva brand to cater to a younger customer; disruptions in the supply chain; disruptions related to the new direct distribution model for UGG in the UK; an overly promotional selling environment; and a prolonged and sustained slowdown in consumer spending, said Tubin.

The brokerage maintained its 2011 EPS estimate for Deckers Outdoor of $4.50 on revenue of $1.201 billion, and its 2012 estimate of $5.10 on revenue of $1.385 billion.

Deckers Outdoor designs and markets footwear, developed for both outdoor activities and everyday casual lifestyle use. The company offers three primary product lines under the following brand names: Teva sports sandals and rugged outdoor footwear; Simple shoes that combine the comfort elements of athletic footwear with casual styling; and UGG authentic sheepskin boots. Other footwear lines include TSUBO, Ahnu, and Deckers brand.

Deckers Outdoor stock moved down 0.33 percent to $95.60 on the NASDAQ Stock Market at 10:02 am EDT.

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