On Monday, Raymond (NS:RYMD) James reiterated a Market Perform rating on Under Armour (NYSE:UA), Inc. (NYSE: UAA), following the company's 2024 Investor Day. The stock, which has experienced a significant 32% gain over the past six months according to InvestingPro data, recently saw a 13% decline in the past week.
The event provided a qualitative overview of Under Armour's strategy, which includes a focus on innovation primarily in footwear, streamlining its product assortment, redefining its brand messaging, exploring geographic opportunities, and restructuring the organization to enhance execution.
With a current gross profit margin of 47% and a healthy current ratio of 2.18, InvestingPro analysis shows the company maintains strong operational fundamentals despite recent challenges.
The company's end-goal is to generate higher quality revenue at full price and to elevate the brand's status, with a particular emphasis on increasing the average selling price of its footwear, which is currently below $100. While no new financial updates were presented, Under Armour reaffirmed its third-quarter fiscal year 2025 and full-year 2025 guidance.
Analysts highlighted the positive aspects of Under Armour's plan, such as its commitment to focusing on the most impactful products, driving brand elevation through innovation, investing in marketing, and increasing market segmentation.
However, they also expressed caution, noting that turnarounds require time and it is premature to make a definitive judgment on the potential impact of Under Armour's actions. They emphasized that the company's newer innovations are not expected to significantly enter the market until the fall/winter of 2025.
In summary, while the strategic plan has been laid out, Under Armour is considered a "show me story" that needs to deliver tangible results. As such, Raymond James has chosen to maintain its Market Perform rating on the stock. According to InvestingPro analysis, the stock appears undervalued at current levels, with 11 analysts recently revising their earnings expectations upward.
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In other recent news, Under Armour has seen a flurry of activity from analysts following its investor day. BMO Capital has maintained an optimistic outlook, highlighting Under Armour's strategy to "premiumize" the brand and significant marketing efforts ahead.
Conversely, Morgan Stanley (NYSE:MS) has maintained a cautious stance, citing early-stage turnaround and potential risks to future earnings per share. TD Cowen adjusted their expectations for Under Armour's marketing spend and raised their price target to $11, based on optimism for a product-led turnaround. Meanwhile, BofA Securities underscored the potential in Under Armour's footwear sector and the return of founder Kevin Plank as President and CEO.
These are recent developments that have followed Under Armour's Q2 results, which reported a decrease in revenue by 11% to $1.4 billion and a drop in e-commerce sales. Despite this, the company exceeded expectations in terms of operating income and earnings per share. The company is now focusing on a more premium market position and enhancing its direct-to-consumer channels.
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