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Why Stifel Remains Bullish On Under Armour After Data Breach

Why Stifel Remains Bullish On Under Armour After Data Breach

Under Armour Inc Class A (NYSE: UAA) confirmed Thursday it suffered a data breach that impacted 150 million of its MyFitnessPal users. The report sent shares of the athletic apparel maker down by nearly 5 percent, but the reaction may be overblown, according to Stifel. 

The Analyst

Stifel's Jim Duffy maintains a Buy rating on Under Armour's stock with an unchanged $18 price target.

The Thesis

Under Armour's digital fitness app MyFitnessPal suffered a data breach in which hackers illegally accessed usernames, email addresses and hashed passwords, Duffy said in a research report. More sensitive data like credit card numbers and government ID information were stored separately by Under Armour and were unaffected, the analyst said.

Any data breach is concerning, but history has shown "little lasting effect" on companies that suffer large-scale breaches, Duffy said. 

The financial hit to companies that suffer a data breach has also proven to be small over the long-term, the analyst said. For example, Home Depot Inc (NYSE: HD)'s 2014 data breach saw the theft of 50 million users' credit card information. Net of insurance recovery, the breach cost the company just $28 million, according to Stifel. 

Under Armour's management was commended for a swift reaction, and it is likely that any impact to the brand and fitness services is "minimal," the analyst said.

Price Action

Shares of Under Armour were trading lower by more 3 percent early Monday morning. 

Related Links:

Analyst: Under Armour Risks 'Prolonged And Pervasive' Promotions, Loss Of Brand Cachet

Under Armour CEO Explains Why 2018 Will Be The Most Important Year For The Brand

Photo by Dhscommtech/Wikimedia. 

Latest Ratings for UAA

Jan 2020ReinstatesNeutral
Dec 2019Initiates Coverage OnEqual-Weight
Nov 2019UpgradesOutperformStrong Buy

View More Analyst Ratings for UAA
View the Latest Analyst Ratings

Posted-In: Apparel athletic apparel data breach Jim DuffyAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


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