On Tuesday, Evercore ISI maintained its underperform rating and $7.00 price target for shares of Under Armour (NYSE:UA), Inc. (NYSE:UAA). The firm expressed continued concern over the company's fourth-quarter sales, referencing the broader trend of sluggish discretionary spending in the first quarter of 2024.
Under Armour has reduced its North American revenue forecast for the third consecutive quarter, and according to the financial services firm, there has been no sign of improvement since the company's call on February 8.
The analyst from Evercore ISI pointed to the possibility of sales falling short of fourth-quarter consensus expectations. This projection is based on applying either normal seasonality or recent multi-year trendlines.
The firm also noted that a recent bridge collapse could disrupt operations at Under Armour's primary east coast distribution center in Baltimore, potentially affecting sales.
Furthermore, the competitive landscape in Europe is becoming tougher for Under Armour, with adidas reported to be gaining momentum. This could mean that international sales are unlikely to see a significant increase that would compensate for the weak performance in the United States market.
Evercore ISI's analysis suggests that the challenges facing Under Armour are not only related to broader market conditions but also to specific operational and competitive issues that could impact the company's financial performance.
InvestingPro Insights
Under Armour, Inc. (NYSE:UAA) has been navigating a challenging market environment, as highlighted by Evercore ISI's analysis. To provide additional context, InvestingPro data indicates that Under Armour is trading at a low earnings multiple, with a P/E ratio of 7.34 and an adjusted P/E ratio for the last twelve months as of Q3 2024 at 7.23. This suggests that the stock may be undervalued relative to its earnings, which could be of interest to value investors.
Despite recent concerns, the company's financial health shows some positive indicators. Under Armour's liquid assets exceed its short-term obligations, and its cash flows can sufficiently cover interest payments, demonstrating financial stability. Moreover, analysts predict the company will be profitable this year, a sentiment supported by a profitable performance over the last twelve months.
InvestingPro Tips for Under Armour reveal that while the stock price movements are quite volatile, the company operates with a moderate level of debt, which may provide some cushion against market fluctuations. Additionally, the company does not pay a dividend to shareholders, which could be a factor for investors prioritizing income generation to consider.
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