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Can Steph Curry Save Under Armour? Footwear Sales Grew 95%

Can Steph Curry Save Under Armour? Footwear Sales Grew 95%
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Back on January 10, Morgan Stanley analysts Jay Sole, Joseph Wyatt and Edward Ryan offered a grim view of Under Armour Inc (NYSE: UA)'s 2016 outlook.

The firm downgraded the stock to Underweight and cut their target price nearly in half from $103 to $62.

Under Armour's footwear is discounted five times against the industry average, the analysts noted. This might hamper growth in the coming year. Under Armour's running shoe prices are down 20 percent from January 2013, while industry running shoe prices have only dropped 4 percent in that time.

Related Link: Morgan Stanley Downgrades Under Armour, Cites Declining Share In Women's Market

"Our view, and the market's, is that Under Armour is a great brand and will eventually become the world's number two athletic wear company and possibly number one," the analysts said. However, they see potentially softening women's apparel sales and long-term limits on footwear growth as the two obstacles the company must overcome to get there.

Morgan Stanley reiterated that Under Armour was offering too good a deal on their shoes, and recommended that Under Armour price its Steph Curry shoes more in line with Nike's premium basketball shoes. Curry is as popular as players with Nike Inc (NYSE: NKE)'s exclusive deals like LeBron James, and even sells more jerseys than James, yet his Under Armour shoes are priced around $50-100 less than Nike's.

The analysts see this as a big opportunity for Under Armour to expand revenue in its existing product line.

UPDATE: Under Armour earned $0.48 per share in the fourth quarter on revenue of $1.17 billion. Footwear sales surged 95 percent from a year ago to $167 million, primarily due to its Stephen Curry signature basketball line and expanded running offerings.

Latest Ratings for UA

Oct 2016Piper JaffrayUpgradesNeutralOverweight
Oct 2016Piper JaffrayUpgradesNeutralOverweight
Oct 2016Wells FargoUpgradesMarket PerformOutperform

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Posted-In: Jay Sole LeBron James Morgan Stanley Steph CurryAnalyst Color Long Ideas Analyst Ratings Trading Ideas Best of Benzinga


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