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UBS keeps Buy on Under Armour stock, confident in growth, leadership change

EditorEmilio Ghigini
Published 19/03/2024, 13:02
© Reuters
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On Tuesday, UBS reiterated its Buy rating on stock of Under Armour (NYSE:UA), Inc. (NYSE:UAA), maintaining a price target of $12.00.

The firm's positive stance on the athletic apparel company is rooted in several factors, including ongoing self-help initiatives that are expected to drive Under Armour back to mid-single-digit percentage annual sales growth and an EBIT margin nearing 10%. These initiatives are anticipated to contribute to upward revisions of the company's earnings per share (EPS).

Under Armour's recent change in leadership, with Kevin Plank resuming the role of CEO, has not altered UBS's outlook. The firm believes that the self-help efforts were in place prior to the brief tenure of outgoing CEO Stephanie Linnartz and are set to continue. While Linnartz's potential to accelerate change was recognized, it was not a core element of the initial investment thesis.

The firm's increased conviction in the Buy rating is partly due to the potential for the stock's price-to-earnings (P/E) ratio to expand if the company delivers EPS surprises. This optimism is linked to the perceived underlying strength of the Under Armour brand and the expected benefits from the company's strategic efforts.

Looking ahead, UBS expresses enthusiasm for the return of Kevin Plank as CEO, suggesting that his leadership may further enhance the stock's upside potential. The firm's commentary reflects confidence in the ongoing strategies and leadership at Under Armour to deliver value to shareholders.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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