This Analyst Still Sees 27% Upside Potential In Under Armour

Despite the fact that Under Armour Inc UA tumbled more than 14 percent Tuesday, analysts at Buckingham remain optimistic on the company's prospects.

BRG's Scott Krasik maintained a Buy rating and $48 price target on Under Armour's stock following the company's Q3 earnings report.

Related Link: Why Under Armour Stock Is Tumbling

Krasik went on to counter some of the negative data points hurting Under Armour's stock. Specifically, the analyst argued that concerns of elevated inventory are now irrelevant since inventory at the end of Q3 grew at just half the rate of sales.

Krasik added that concerns of a notable slowdown in footwear sales growth are overblown since the company did grow its footwear sales at twice the rate of its apparel growth.

Meanwhile, all of Under Armour's vital growth channels were strong in the third quarter, including international sales which rose 74 percent and footwear sales rising 42 percent.

In addition, Under Armour's 18 percent rise in apparel sales is "solid" given the "tail-end of inventory dislocation at retail."

With that said, the analyst suggested Under Armour's story is "cleaner than it has been in almost a year with the long-term growth opportunities intact."

Looking forward, Krasik is expecting: 1) gross margins to improve sequentially, 2) international growth to remain elevated and become more profitable, 3) North American distribution will broaden in a productive manner, and 4) management will continue investing in long-term initiatives.

Bottom line, the analyst continues to believe Under Armour remains "the best growth story in consumer and would begin or add to positions at current levels."

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