Summary:
- Under Armour (NYSE:UA) traded 9% lower on Wednesday morning, after investors expressed doubts during the company’s annual investor conference.
- Our analysis of its market cycles indicates that more downside is likely in the near and intermediate terms.
At its annual investor conference, the sports apparel company outlined a shift in revenues to 61% clothing, 32% footwear, and 7% accessories. Management set a goal to achieve this shift away from apparel by 2023, as well as increasing revenue from digital sales channels.
Not all Investors are impressed. “Expectations appear elevated, suggesting the company will rapidly return to high-single-digit earnings,” explained Camilo Lyon of Canaccord Genuity. But he has “serious doubts” about the feasibility of their current business plan.
In analyzing the market cycles for UAA, we can see that it appears to be in a declining phase for its current minor cycle. Having already tagged the low end of its resistance zone, it is now threatening the lower end of support.
Given these bearish indicators, our work indicates caution would be prudent. We expect further corrections into February 2019 - and beyond.
For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.