Under Armour: The Company Is More Exciting Than The Stock

Nomura downgrades Under Armour Inc (NYSE: UAA) to Reduce from Neutral, saying the shares are enjoying a higher valuation despite the company may have gone past its purple patch.

The downgrade follows Under Armour’s disappointing fourth-quarter results that affirmed many of Nomura’s concerns.

“Although we recognize UA's brand value and see ongoing sales growth ahead, we worry that 1) even if FY17's guide proves conservative; and/or 2) even if we play out a Blue-Sky Bull-Case through FY20, UAA appears to have matured past its high-growth phase, while still enjoying its high-growth multiple,” analyst Simeon Siegel wrote in a note.

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Though Siegel sees “exciting path” ahead for Under Amour, the analyst believes at about 43x his FY18 EPS estimate, shares are fairly valued even in an overly optimistic scenario.

At last check, UAA shares of Under Armour had fallen 1.60 percent to $21.46; UA was down 2.85 percent at $19.25. Siegel also slashed his price target to $16 from $27 on UAA.