Morgan Stanley: How Steph Curry Can Save Under Armour

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Back on January 10, Morgan Stanley analysts Jay Sole, Joseph Wyatt and Edward Ryan offered a grim view of Under Armour Inc UA's 2016 outlook. They downgraded the stock to Underweight and cut their target price nearly in half from $103 to $62.

Under Armour's footwear is discounted five times against the industry average, the analysts noted. This might hamper growth in the coming year. Under Armour's running shoe prices are down 20 percent from January 2013, while industry running shoe prices have only dropped 4 percent in that time.

Related Link: Morgan Stanley Downgrades Under Armour, Cites Declining Share In Women's Market

"Our view, and the market's, is that Under Armour is a great brand and will eventually become the world's number two athletic wear company and possibly number one," the analysts said. However, they see potentially softening women's apparel sales and long-term limits on footwear growth as the two obstacles the company must overcome to get there.

Morgan Stanley reiterated that Under Armour was offering too good a deal on their shoes, and recommended that Under Armour price its Steph Curry shoes more in line with Nike's premium basketball shoes. Curry is as popular as players with Nike Inc NKE's exclusive deals like LeBron James, and even sells more jerseys than James, yet his Under Armour shoes are priced around $50-100 less than Nike's.

The analysts see this as a big opportunity for Under Armour to expand revenue in its existing product line.

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Posted In: Analyst ColorLong IdeasAnalyst RatingsTrading IdeasJay SoleLeBron JamesMorgan StanleySteph Curry
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