On Friday, Under Armour (NYSE:UA)’s stock continued its downward trajectory, dropping as much as 8.8%, after falling the day before. The decline followed the company’s investor day on December 12, which left analysts weighing in on the sporting company’s future. The presentation led to a 13% drop in shares over the week, as market participants digested the details and implications of the company’s strategy.
BMO Capital expressed a measured optimism, noting that while the investor day was light on numbers, it highlighted Under Armour’s strategy to “premiumize” the brand and suggested significant marketing efforts ahead. The firm sees potential in the company’s EBITDA/EPS opportunity but expects shares to continue their pattern of rising and then fading to higher lows as Under Armour works to regain investor appreciation.
In contrast, Morgan Stanley (NYSE:MS) maintained their cautious stance, pointing out that while Under Armour’s go-forward plan is clear and the new leadership credible, the market is skeptical about the timeline for the company’s inflection point. The firm’s Underweight thesis remains unchanged, citing the early stage of the turnaround and potential risks to out-year EPS, among other concerns.
BofA Securities provided insights into Under Armour’s product pipeline, particularly in footwear, noting encouraging feedback from retail partners. The return of founder Kevin Plank as President and CEO was highlighted, with his confident outlook on steering a successful turnaround. However, BofA also pointed out that the company is still in the early stages of elevating its product and reducing promotions, which are key to improving margins.
TD Cowen adjusted their expectations for Under Armour’s marketing spend, anticipating increased costs as the company aims to reposition its brand. The firm raised their price target to $11, based on optimism for a product-led turnaround but acknowledged the competitive risks.
Needham’s analysis found the investor day to be helpful qualitatively but lacking in quantitative details. The CFO reiterated guidance without making a formal presentation, and while the core strategies were sensible, execution remained a question mark. The firm anticipated it would take until at least Fall/Winter 2025 to see clear evidence of a turnaround.
Telsey commented on the management’s understanding of challenges and vision for the brand’s future. However, the lack of a clear timeline for growth and the need for more retail partnerships and rebalanced physical retail distribution left the firm wanting more specifics on product and distribution plans.
Finally, Truist noted incremental positivity regarding product innovations and opportunities but emphasized that visibility into forward growth remains limited at this early stage of turnaround efforts, awaiting more concrete data points that show new products and strategies are driving growth.
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