Macquarie Sets Coverage for 4 Big Names in Sportswear: Starts VF at Outperform, Nike, Under Armour at Neutral, Downgrades Columbia

Macquarie Equities Research's Laurent Vasilescu detailed the firms view on four big names in the sportswear industry in a note released after the close on January 16th. The four companies covered in the note are VF Corporation

, Under Armor

, Nike

and Columbia

.

- Initiated with an Outperform rating and $71 price target In justifying his position, Vasilescu highlighted VFC's ability to acquire and grow brands. He specifically pointed to North Face and Vans, each of which have more than tripled their business since their respective acquisition. In addition to VFC's success in acquisitions, Vasilescu cites the companies ability to leverage suppliers and cost mitigating investment in its Dominican factory as an indicator of the company's high future performance.

- Neutral rating and $92 price target Under Armour has performed well over the last ten years, marking a 36 percent revenue CAGR vs. the 10 percent average CAGR for the top 20 industry brands over the same time period. Despite this better-than-average performance, Vasilescu remains wary of Under Armour's ability to compete with the larger R&D and marketing budgets of industry leaders such as Nike. It is due to this and the long term challenge of managing its global supply chain as growth continues that has led Vasilescu to the sidelines on Under Armour.

- Neutral rating, $80 price target As mentioned above, Nike has one of the largest R&D budgets in the industry and has also performed slightly above the top 20 brand CAGR for the last five years. Vasilescu attributed his rating and price target to stagnant results in the European market, mixed results from Japan and China, and possible headwinds in the costs associated with footwear.

- Downgraded to Underperform with $57 target Of the four, Columbia is the only stock to receive a downgrade from Vasilescu. The Macquarie analyst showed concern related to declining revenue for the past two years and the prior year's recall of the Omni-Heat Electric Jacket due to burn hazards. Vasilescu had this to say about Columbia's 2014 fiscal year: “Management's preliminary guidance for FY14 suggests that next year may be a turnaround story. However, we are sceptical that FY14 is any different.”