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Will Under Armour Meet Its New Lowered Bar? This Analyst Is Unsure

Will Under Armour Meet Its New Lowered Bar? This Analyst Is Unsure
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Under Armour Inc (NYSE: UAA) managed to surpass what analysts were expecting in its earnings report, but beyond the headline numbers, there are many reasons to be concerned.


First, Under Armour's beat was of "low quality" while the reported gross margin was worse than expected, Susan Anderson of FBR Capital Markets said during CNBC's "Squawk on the Street" segment. Also, the company pulled forward some revenue from the third quarter into the second quarter which by default makes the Q2 figure look worse.

But there is more to the story as Under Armour slashed its top-line guidance for the full year 2017 in conjunction with a "huge" restructuring charge, she added.

Granted, Under Armour's revised revenue growth is still notable at 9 to 11 percent (versus a prior forecast of 11 to 12 percent) but investors should still be skeptical of the company's ability to meet the new low bar, the analyst continued.

The reason for this is simple: the company guided its third quarter revenue growth to be flat, which means it needs around a 20-percent growth rate in the fourth quarter. Working against the company's favors, it will need to achieve this strong growth rate without any boost from new products coming out over the next two quarters.

At last check, shares of Under Armour were down 7.69 percent at $18.48.

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Latest Ratings for UAA

Nov 2017SusquehannaUpgradesNegativeNeutral
Nov 2017UBSMaintainsNeutral
Nov 2017JP MorganMaintainsUnderweight

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