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What Does Wall Street Think about Under Armour?

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Jan. 23 2017, Updated 9:06 a.m. ET

Comparing Wall Street’s ratings for Under Armour with its peers

Under Armour (UAA) is covered by 36 Wall Street analysts who have a positive to neutral view of the company. The company’s Class A shares are rated 2.3 on a scale of 1.0 for “strong buy” to 5.0 for “sell.” Class C shares have a higher rating of 1.0.

In comparison, analysts have given peers Lululemon Athletica (LULU), Columbia Sportswear (COLM), and Nike (NKE) ratings of 2.4, 2.1, and 2.2, respectively.

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A look at analyst recommendations

Of the 36 analysts covering UAA, only 3.0% have a “sell” recommendation for UAA stock. About 47.0% of analysts suggest a “buy” for the stock, and 50.0% recommend a “hold.” In comparison, 60.0% of analysts suggest a “buy” for Nike, and 55.0% recommend a “buy” for Columbia Sportswear.

Rating revisions

After its 3Q16 earnings results, Under Armour was downgraded by some research firms. Deutsche Bank, Mizuho Securities, and Telsey Advisory Group downgraded the company from a “buy” to a “hold” on concerns of slower revenue growth and margin challenges.

Mizuho Securities analyst Betty Chen commented in a note, “We are downgrading UA to Neutral and lowering our estimates and PT to $32 to reflect unexpected margin challenges from a structural change in the business. While management reiterated FY16/FY18 sales targets, we are disappointed by EBIT reduction due to: 1) commentary for flattish gross margins in FY17- FY18 due to category mix, 2) significantly lower than expected margin within footwear, and 3) unexpected plans to invest in talent/infrastructure in order to capitalize on the momentum in footwear and Int’l. Given the delayed profitability trajectory and UA’s premium multiple, we expect the shares to remain range-bound.”

If you’re seeking exposure to UAA, you can consider the iShares Russell Mid-Cap Growth (IWP), which invests 0.26% of its portfolio in the company.

To know how Under Armour is currently valued compared to its peers, read on to the next part.

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