Under Armour Madness In Latin America

Shares of Under Armour Inc (NYSE: UA) rose on Monday after FBR & Co. analysts Susan Anderson and Andrew Schmidt reiterated an Outperform rating and raised their price target from $86 to $90. The promotion is based on what they call the "UA Madness in Latin America." They believe "brand recognition bodes well for accelerating revenue growth."

The firm decided to look into the company's brand power due to its recent success in footwear and the well-executed launch of Stephen Curry's first signature shoe, the "Curry One." In the second part of this investigation, the analysts evaluate Under Armour's performance in Latin America, specifically on Brazil.

"While the Latin American sportswear market is one of the smaller markets internationally ($24B in 2013, according to Euromonitor, vs. $53B in U.S.), its growth rate is likely faster, given the strong preference for athletics, shift to athleisure, increasing disposable income, and emerging middle class." The analysts "believe Latin American growth will significantly drive upside to revenue expectations over the next several years and estimate Latin American revenue could reach ~$400M by 2018 (~5% total UA revenue), contributing ~200–300 bps to revenue growth in 2016–2018."

Anderson and Schmidt see the largest opportunity in Brazil, where their survey work shows solid brand recognition and preference. They estimate Brazil could contribute at least 1.4 points to revenue growth by 2018, and believe that the 2016 Olympics, to be held in Rio de Janeiro, will be a catalyst for Under Armour growth in the region.