Under Armour's ArmourBox Subscription Service, Reviewed

Could Under Armour Inc UAA's new subscription box service ArmourBox help boost shares higher?

Baird's Jonathan Komp said it's possible, as he maintains an Outperform rating on Under Armour's stock with an unchanged $25 price target after an initial testing of the new service yielded a positive outcome. ArmourBox sends customers four to six items every 30, 60 or 90 days and is the final product of what seems to be multiple years in the making.

Under Armour's new service could be seen as a strategy to differentiate its brand from others that don't offer a similarly tailored service, Komp said in a research report. More important, the service could prove to be an effective tool for acquiring and engaging customers, especially the coveted women's group, by leveraging its growing data capabilities.

The experience was found to be "favorable" and the service is completely risk-free with no return fees. Also, if consumers opt to keep every item in a box they will receive a 20 percent discount on that order.

Finally, Under Armour's long-term outlook remains favorable and a recent slowdown in athletic apparel and footwear sales reflects "temporary disruptions and not deterioration of brand fundamentals," Komp wrote. While the stock does look expensive on a near-term depressed earnings valuation model, the stock is also "reasonable" for investors with a longer-term outlook beyond one year where many financial metrics will normalize while growth and profitability will resume.

At time of publication, shares of Under Armour were down 3.26 percent at $16.91.

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