On Wednesday, Baird reiterated a Neutral rating on Under Armour (NYSE:UA), Inc. (NYSE:UAA) with a steady price target of $10.00, close to the current trading price of $10.09. According to InvestingPro data, 11 analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company's prospects. Under Armour is set to conduct a qualitative, product-focused investor meeting in New York on Thursday.
The stock has seen a notable increase, climbing 18% since October, outpacing the S&P 1500's 9% rise and its industry group's 12% gain during the same period. This surge is attributed to improved margins which have led to positive earnings revisions.
The analyst from Baird pointed out that while the stock has performed well recently, with InvestingPro data showing an impressive 47.95% gain over the past six months, investors are looking for clear indicators of Under Armour's shift towards higher targeted full-priced selling and the results of efforts to rebuild its multi-year innovation pipeline.
The company maintains a healthy financial position with a current ratio of 2.18, indicating strong liquidity to support its strategic initiatives. So far, the company's innovations have not made a significant breakthrough in the market. Additionally, there is interest in the potential impact of senior Brand, Creative, and Design talent that has been brought on board.
Despite the performance and the strategic initiatives in place, the analyst expressed a cautious stance. The forward-looking fiscal year 2025 estimates (F2025E) are perceived as low, suggesting there might be room for growth. According to InvestingPro's Fair Value analysis, Under Armour appears undervalued at current levels, with multiple additional insights available through InvestingPro's comprehensive research reports.
However, Baird prefers to wait for more clarity on Under Armour's multi-year recovery before taking a more positive stance on the stock, especially considering the current next twelve months enterprise value to earnings before interest, taxes, depreciation, and amortization (NTM EV/EBITDA) multiple of 13.8 times.
The upcoming investor meeting is likely to provide further insights into the company's strategic direction and product offerings, which could be pivotal in assessing Under Armour's long-term growth trajectory for its $5.4 billion revenue business. The market will be watching closely for updates that may influence the company's stock performance, particularly given its moderate debt levels and strong liquidity position. For deeper insights into Under Armour's financial health and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 US stocks.
In other recent news, Under Armour has been the focus of several significant developments. The company reported a notable operating income and earnings per share that exceeded expectations, despite a decline in second-quarter fiscal year 2025 sales. As a result, Telsey Advisory Group adjusted its outlook on Under Armour, raising the price target to $10, while maintaining a Market Perform rating. Citi also maintained a Neutral rating on Under Armour but raised the price target to $12.00, following the company's strong second-quarter earnings per share.
Under Armour also reported mixed Q2 results with an 11% decline in revenue to $1.4 billion, and a decrease in e-commerce sales. However, the company is shifting its focus towards premiumization and enhancing direct-to-consumer channels. In addition, Under Armour is managing a wholesale reset and optimizing logistics, with restructuring charges expected to total between $140 million to $160 million by fiscal 2026.
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