Morgan Stanley: Under Armour Could Provide 5-Year Revenue Target At Investor Day

Under Armour Inc UAA is preparing for its first investor day in three years on Dec. 12.

The Analyst

Morgan Stanley analyst Lauren Cassel maintains an Equal-Weight rating and $21 price target on Under Armour.

The Thesis

Under Armour's investor day is one of the most anticipated events for retail investors this year, according to Cassel. Following two difficult years for the company, things may finally be turning the corner for Under Armour.

Cassel predicts there's a 40 percent chance the company outlines a credible five-year path to high single digit revenue CAGR and a 10 percent EBIT margin.

“This could drive the stock 10%+ higher, in our view, which options currently do not price in,” Cassel wrote in a note.

Cassel says many agree Under Armour shouldn't be a 3 percent EBIT margin business and in her bear case, management guides to a mid-single digit 2023 EBIT margin.

"The stock reaction likely also hinges on the amount of detail management provides when bridging the EBIT margin target from ~3 percent today," Cassel said.

The more granular detail management gives on margins, Cassel says, the more confidence they expect investors to have in the targets.

Price Action:

Under Armour shares are up more than 6 percent, trading around $23.18 at time of publication.

Related Links:

Under Armour: The Comeback No One's Talking About

Under Armour's Existential Crisis: Niche Player Or Global Competitor?

Photo courtesy of Under Armour.