Under Armour rose following Stifel’s optimism
Under Armour (UAA) shares soared 6.3% on June 4. Under Armour was the top gainer in the S&P 500 Index (SPY) following a bullish note from Stifel analyst Jim Duffy. He reiterated a “buy” rating on the company and raised the target price from $20 to $27. The revised target price reflects 26% upside from the previous day’s closing price.
Duffy said, “Recent discussions with Under Armour leave us highly encouraged by leadership commitments to profitability improvement,” wrote Duffy. He also said, “Projecting the profitability focus forward to future years gives us a more optimistic view of earnings power and therefore upside potential for shares.”
The S&P 500 Index rose by 12.25 points or 0.44% to 2,746 yesterday. Consumer Cyclicals led the charge and grew 1.1%. The S&P 500 Apparel and Accessories Index rose 1.8%.
Under Armour’s turnaround
Under Armour, which reported its first-quarter results early in May, beat Wall Street analysts’ earnings and revenue estimates. However, the gross margin continued to fall and declined by 120 basis points during the quarter. However, Duffy thinks that the gross margin could change.
“With the recent market evidence that performance athletic demand and channel inventories are healthy, we have increased confidence that inventories will be appropriately matched to demand before year-end and margins will inflect and margin improvement can continue in 2019 and beyond,” according to Duffy
Under Armour’s shares have risen 57% year-to-date—ahead of the S&P 500 Index (+2.7%) and the S&P 500 Apparel and Accessories Index (+11.3%).
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