Under Armour Up On Analyst Comments

Shares of Under Armour UA spiked higher on Wednesday’s open following an upgrade by Jefferies. Jefferies boosted the stock’s rating from Hold to Buy and the price target from $50 to $65.

The report boldly starts by claiming that, “we don’t believe the market is factoring in the magnitude of UA's LT revenue growth potential.”

Equity analyst Randal Konik points out that the athletic apparel market is growing much faster than clothing as a whole. Athletic apparel sales rose nine percent in 2013, while apparel as a whole is up just two percent.

Jefferies also cites a survey it conducted on preferences for different activewear brands. “Our work confirms a strong and growing bias among youths for the UA brand, which ranked second only to Nike in terms of ‘coolness' and preference.”

Konik writes, “Valuation, though rich, is more compelling now, given the stock’s recent pullback.”

The $65 price target was derived with a combination of 54 times earnings, 27.5 times EV/EBITDA and 3.9 times price to sales.

Shares of Under Armour are currently up 2.94 percent to $52.60.