Under Armour’s Strong Q3 Performance Amid Asia-Pacific Challenges and Strategic Outlook

Analyst Lorraine Hutchinson of Bank of America Securities reiterated a Hold rating on Under Armour (UAA – Research Report), reducing the price target to $10.00.

Lorraine Hutchinson’s rating is based on several key observations regarding Under Armour’s current market position and future prospects. The company reported a stronger-than-expected performance in the third quarter, with sales and gross margins surpassing estimates, leading to an adjusted earnings per share (EPS) of $0.08. This positive outcome prompted management to slightly increase their forecast for future sales and EPS. However, despite these improvements, there are concerns about headwinds in the near term, particularly due to challenges in the Asia-Pacific region and currency fluctuations.
Despite the consistent improvements in gross margins, driven by supply chain efficiencies and reduced promotional activities, Hutchinson notes that the valuation reflects a balanced view of potential long-term recovery and current market challenges. The company’s price objective was adjusted downward due to a longer anticipated timeframe for brand turnaround, suggesting that while there is potential for growth, significant hurdles remain. Furthermore, the competitive landscape in the Asia-Pacific region continues to put pressure on sales, underscoring the need for strategic brand investments and marketing initiatives to stabilize the situation.

According to TipRanks, Hutchinson is a 4-star analyst with an average return of 6.5% and a 57.18% success rate. Hutchinson covers the Consumer Cyclical sector, focusing on stocks such as Nike, TJX Companies, and Lululemon Athletica.

In another report released yesterday, Telsey Advisory also maintained a Hold rating on the stock with a $10.00 price target.