On Tuesday, UBS reaffirmed its Buy rating on Under Armour (NYSE:UA), Inc. (NYSE:UAA) with a steady price target of $11.00. The firm's analysis indicates that Under Armour's fundamentals are still facing challenges, but sell-side estimates appear to have already accounted for these trends. Consequently, UBS predicts an in-line report for the first quarter of 2025.
The UBS analyst expects that Under Armour will reiterate its full-year 2025 earnings per share (EPS) guidance of $0.18 to $0.21. This reiteration is anticipated to maintain the consensus EPS estimate for fiscal year 2025 at its current level. Given that a weaker report is likely already anticipated by the market, significant changes in Under Armour's price-to-earnings (P/E) ratio are not expected post-report.
The options market is currently pricing in a potential stock price movement of plus or minus 6.8% around the earnings report event. This is a smaller fluctuation compared to the historical average move of plus or minus 9.8%. The analyst suggests that a less volatile response than average could be seen following the report.
Under Armour's upcoming earnings report is a focal point for investors, as the company's performance and guidance will provide insights into its current financial health and future outlook. The market's expectations are set for a report that aligns with the company's previous forecasts, potentially avoiding any major surprises in stock valuation.
In other recent news, Under Armour has been in the spotlight due to several developments. The company recently settled a 2017 shareholder class action lawsuit for $434 million, utilizing its available cash and $1.1 billion revolving credit facility to fund the settlement. This move introduces new financial risks and reduces the company's financial flexibility.
Simultaneously, Under Armour's stock was downgraded by Morgan Stanley (NYSE:MS) from Equalweight to Underweight, citing concerns about the company's limited growth prospects and the risk of negative earnings per share revisions. In contrast, Skechers USA (NYSE:SKX) Inc. was upgraded from Equalweight to Overweight by Morgan Stanley, based on positive results from proprietary research and the potential for positive earnings per share revisions over the next twelve months.
These recent developments highlight the contrasting fortunes of the two sportswear brands. Analysts from firms like Barclays (LON:BARC) Capital Inc., BMO Capital Markets Corp., Williams Trading, and Evercore ISI have been closely monitoring these developments, adjusting their ratings and price targets for Under Armour accordingly.
Despite facing challenges, both Under Armour and Skechers continue to navigate the competitive sportswear market.
InvestingPro Insights
Under Armour's (NYSE:UAA) market landscape and financial health are critical for investors, especially in light of the upcoming earnings report. The latest data from InvestingPro shows a market capitalization of $2.89 billion, indicating the size and significance of the company in the industry. With a P/E ratio of 12.47, Under Armour is positioned in the market with a valuation that reflects its earnings potential, which is further supported by a slightly lower adjusted P/E ratio of 12.38 for the last twelve months as of Q4 2024.
InvestingPro Tips suggest that Under Armour's stock price movements have been quite volatile, which aligns with the options market's expectation of a potential stock price movement around the earnings report. Additionally, the company operates with a moderate level of debt and has liquid assets that exceed its short-term obligations, providing a cushion for financial operations. Analysts also predict that the company will be profitable this year, which is consistent with Under Armour being profitable over the last twelve months.
With a strong gross profit margin of 46.13% for the last twelve months as of Q4 2024, Under Armour demonstrates its ability to maintain profitability despite revenue challenges. It's important for investors to note that the company does not pay a dividend, which may influence investment decisions based on individual strategies for income or growth.
To gain deeper insights and additional InvestingPro Tips for Under Armour, investors can explore https://www.investing.com/pro/UAA. There are 5 additional tips available that could further inform investment decisions. For those interested in the full suite of tools and data, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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