On Friday, Telsey Advisory Group adjusted its outlook on Under Armour (NYSE:UA), Inc. (NYSE:UAA) stock, increasing the price target to $8.00 from the previous $7.00, while keeping a Market Perform rating.
The revision follows Under Armour's recent report on its first quarter of fiscal year 2025 (1QF25), which, although soft, surpassed expectations and led to the company raising its full-year 2025 (FY25) guidance slightly by $0.01.
Under Armour's management has expressed optimism regarding the company's strategic changes, focusing on repositioning its marketing and product lineup to enhance its premium brand image and increase full-price sales.
Despite the positive direction, analysts note that it may take several quarters for these adjustments to reflect in revenue trends due to the early stage of the product and marketing overhaul.
The company also delivered a more favorable forecast for the second quarter of fiscal year 2025 (2QF25) than anticipated, attributing this to lower-than-expected selling, general and administrative expenses (SG&A).
However, Under Armour is navigating a highly competitive landscape, with other brands like Hoka, On, and New Balance gaining market share in footwear, adidas seeing a resurgence in lifestyle segments, and Nike (NYSE:NKE) intensifying its performance innovation efforts.
Investors responded positively to the first quarter report, encouraged by the company's performance against modest expectations. Still, for the stock to experience sustained growth, Under Armour may need to demonstrate more rapid business improvement.
The price target increase to $8 is based on applying an elevated price-to-earnings (P/E) multiple of approximately 20 times, up from the previous 16 times, to the projected fiscal year 2026 (FY26) earnings per share (EPS) of $0.40. This adjustment reflects the potential benefits of Under Armour's turnaround initiatives.
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