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.
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.
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.