The Bottom Has Formed For Under Armour, Jefferies Says

Under Armour Inc (NYSE: UAA) has strengthened over the past three years and is well positioned in the “high-growth athletic apparel and footwear space,” Jefferies’ Randal J. Konik said in a report. He added that the company had “significant opportunity to scale” in the years ahead.

Konik upgraded the rating on Under Armour to Buy, while raising the price target from $19 to $27. He mentioned that the share price had bottomed. Furthermore, stock valuation had compressed both on an absolute basis and relative to peers, providing “significant upside in the years to come.”

Under Armour Has Strengthened

“Performance, sports-inspired, and outdoor apparel/footwear have outpaced traditional apparel/footwear over the past several years. This trend should continue in the US, where UA has significant exposure, and internationally, where UA penetration is growing,” Konik commented.

The analyst said Jefferies’ proprietary three-year survey indicated that the Under Armour brand had strengthened. Compared to three years ago, respondents had greater recognition of the Under Armour brand and found the brand to be more stylish and functional. They also view Under Armour as less expensive and seemed more likely to buy the brand in the near term.

While the resurgence of adidas AG (ADR) (OTC: ADDYY) has recently been “widely broadcasted,” core retro styles seem to have reached “peak saturation,” and should lose share going ahead, Konik stated.

At last check in Friday's pre-market session, shares of Under Armour were up 3.53 percent at $19.65.

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