Guidance 'Much More' Important Than Earnings For Under Armour, Deutsche Bank Says

In a report published Tuesday, Deutsche Bank analyst Dave Weiner reiterated a Buy rating and price target of $93 on Under Armour Inc (NYSE: UA). The analyst expects upside to the Q2 expectations, along with continuing brand momentum in 2H.

However, analyst Weiner asserted that investors are likely to be more concerned with the company's 2H guidance, since "UA's 2Q results are the least meaningful of the year. However, given the stock's 31 percent YTD run & high valuation based on the LT success of the brand, 2Q must again demonstrate continued global momentum on multiple fronts including footwear, intl., apparel, DTC, and women's, even as the operational complexity of the business grows."

Although the analyst expects the Q2 results to come in largely in-line with the consensus, there is expected to be modest upside to the revenue and SG&A margins. However, given the size of Q2 as a quarter, it is unlikely to have any meaningful impact on the FY guidance.

"[W]e think both EPS & multiple targets could be conservative over time, as UA pursues its global expansion," the Deutsche Bank report stated, while adding that although the Apparel business was expected to decelerate, it would still remain robust, while there was increased confidence in the Athletic sector continuing to outperform.