Citi Still Likes Under Armour

In a report published Wednesday, Citi analysts reiterated their Buy rating on Under Armour Inc UA and raised the price target from $88 to $96.

"As UA looks to become a global athletic lifestyle company, mgmt continues to demonstrate steady progress with more diversified category, channel, and international drivers (with Q1 growth of 41% in footwear & 74% in int'l)," the analysts said.

Despite the core apparel segment witnessing slower sequential and year-on-year growth, which could lead to some headline risk for the company's stock, the segment posted growth of over 20 percent in Q1, despite highly tough comps.

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Berstein also expects "solid momentum from increased investments in DTC, category extensions, & marketing through the rest of the year."

"We still view women's, US dept store, footwear, and broader int'l expansion as key long-term opportunities for the brand, even as mgmt works to monetize digital apps," the analysts added.

Despite air freight pressures and higher Fx, Under Armor marginally raised its FY15 guidance, with revenue growth expected at 24 percent year-on-year and operating income growth of 13-15 percent year-on-year. After FY2-15, the analysts expect the company to factor in the higher air freight, Fx and deal-related expense. In addition, the analysts expect apparel comps to ease post FY 2015, with digital acquisitions and initiatives related to supply chain and savings also easing.

According to Bernstein, "potential upside could come from: 1) faster growth in footwear, w/better than expected success in newer platforms & strong retail partnerships; 2) accelerating growth in int'l; 3) increased square footage for UA women's & youth apparel at Dick's; and 4) continued market share opptys in newer categories like outdoor, golf, and other seasonal product like winter outerwear, etc."