Under Armour Inc UAA is an "unloved" company among analysts but the company has a path to deliver upside versus expectations, according to Piper Sandler.
The Under Armour Analyst: Erinn Murphy upgraded Under Armour's stock from Neutral to Overweight with a price target lifted from $14 to $28.
The Under Armour Thesis: Three out of four analysts that cover Under Armour's stock have either a Neutral or Sell rating despite a 30% year-to-date gain in the stock, Murphy wrote in the note. These analysts may be proven to be on the wrong side of the trade for five reasons:
- The upcoming Steph Curry 8 footwear launch will help expand shelf space.
- The new Curry branded items position Under Armour for growth as the Golden State Warriors all-star is among the "best and most loved" players in the NBA.
- Management deserves credit for recent improvements in the women's category after the Meridian pants and Infinity bra were top sellers.
- The potential for team sports to resume playing would support Under Armour's new innovation in cleated footwear.
- New items in the ColdGear and HeatGear product lines.
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Aside from product improvements and innovation, Under Armour has shown discipline around inventory, promotional activity, and cost controls, the analyst wrote in the note.
Finally, shares of Under Armour are trading at two times EV/sales and this is at the low-end of its range of 2.2 times to seven times and a median of three times.
UAA Price Action: Shares of Under Armour were trading higher by more than 2.5% at $23.02 after hitting a new 52-week high of $23.50 earlier in the session.
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