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Goldman's 12-Month Target On Under Armour Falls From $49 To $45

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Goldman's 12-Month Target On Under Armour Falls From $49 To $45
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After market close on May 31, Under Armour Inc (NYSE: UA) lowered its revenue and EBIT guidance for FY16, driven by the recent development associated with The Sports Authority’s (TSA) bankruptcy.

Goldman Sachs’ Lindsay Drucker Mann maintained a Neutral rating on Under Armor, while lowering the price target from $49 to $45.

Impact Of TSA

Mann mentioned that the bankruptcy has led to the liquidation of TSA’s business rather than a sale or restructuring, as had previously been expected by Under Armor’s management.

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Pointing out that the guidance “suggests $120mn of incremental lost sales from TSA,” the analyst estimates an impact of 10 percent, 45 percent and 45 percent in 2Q, 3Q and 4Q, respectively, of the total $120 million, along with impact on the North America business.

“We assume 1/3rd sales recapture as lost sales from TSA are picked up elsewhere, including major sporting goods retailers, UA outlets, and UA.com, per guidance. This implies a net $8mn/$36mn/$36mn reduction in sales expectations,” Mann stated.

Estimates Lowered

Mann also expects 40-50 percent contribution margin on lost sales, based on the revised guidance.

The FY16 revenue and EBIT estimates have been lowered to $4.97 billion and $468 billion, respectively.

The FY16 EPS estimate has been lowered from $0.67 to $0.60, while the FY17 and FY18 EPS estimates have also been revised.

Latest Ratings for UA

DateFirmActionFromTo
Jan 2017CLSAInitiates Coverage OnBuy
Nov 2016Stifel NicolausMaintainsHold
Oct 2016MizuhoDowngradesBuyNeutral

View More Analyst Ratings for UA
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Lindsay Drucker MannAnalyst Color Price Target Analyst Ratings Best of Benzinga

 

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