6 Reasons Under Armour Is Still A Buy After CES Unveilings

• Shares of Under Armour Inc UA have appreciated 19.49 percent over the past one year, from a low of $64.65 on January 15, 2015.
• Brean Capital’s Eric Tracy has maintained a Buy rating on the company, with a price target of $110.
• Following the presentation and Q&A session at the CES, Tracy believes that there are several reasons to remain positive on the stock.

Analyst Eric Tracy listed six major takeaways from Under Armour’s presentation at the CES.

Firstly, the initial guidance of $200 million in Connected Fitness revenues for FY18 are likely to prove conservative, with ads, subscriptions, licenses and the launch of enhanced wearables, including HealthBox, a smart shoe and headphones, driving the upside.

Secondly, although the digital health/fitness market is intensely competitive, Tracy believes that Under Armour has significant brand and scale advantages, with the “ability to fund R&D, organic development or acquisitions, and large, high profile manufacturing partnerships.”

Thirdly, the launch of the HealthBox produce portfolio offers the company a new dimension through which to engage customers with the Under Armour/Connected Fitness platform. According to the Brean Capital report, “UA HealthBox affords first stage holistic digital fitness/health ecosystem, but will evolve over time.’

Fourth, the collaboration with International Business Machines Corp. IBM, announced by Under Armour on January 6, “creates significant opportunity for both evolutionary and revolutionary improvements” to Under Armour’s Record app, allowing the company to “create a personalized training system, with recommendations informed by results from measurably similar peers.”

Fifth, Tracy stated that the Connected Fitness platform was likely to remain “device agnostic” in the near term, although competition between device manufacturers could emerge in the longer term. This essentially means that in the near term, users would be able to connect to the platform using any device of their choice.

“While in the short term, we believe this strategy has the advantage of maximizing accessibility by lowering barriers to use, we also envision a day when UA looks to "close the loop", creating a complete UA digital/health ecosystem,” the report explained.

Lastly, Tracy believes that the Connected Fitness model offers the company leverage to capture consumer data on its over 160 million users, which can then be used to sell more Under Armour products globally.