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Sterne Agee Maintains Buy, $90 Target on Under Armour


In a flash note, Sterne Agee reiterates its Buy rating, $90 target on Under Armour, Inc. (NYSE: UA) as new products drive sales and cover price increases but inflation costs may pressure margins.

Sterne Agee says, “The increase in retail price points is not enough to offset the cost inflation. Some commodity costs are beginning to moderate, though oil is not at this time, and production capacity is increasing globally, which may lead to lower labor costs. UA management expects that margins will improve in 2H12, as costs locked down for that period have moderated since May. Management expects GM to be in 50s, and EBIT margin to exceed 13% within the next 3 to 5 years, which would equate to EPS of $2.70 - $3.90 between 2013 and 2015 based on a revenue CAGR of 20%.”

UA closed at $78.31 on Tuesday.


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