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Under Armour stock target reduced, keeps Hold rating on company's strategy

EditorNatashya Angelica
Published 05/17/2024, 11:53 AM
© Reuters

On Friday, Truist Securities adjusted its price target for Under Armour (NYSE:UA), Inc. (NYSE:UAA) shares, reducing it to $7.00 from the previous $8.00, while retaining a Hold rating on the stock. The adjustment follows Under Armour's announcement of a comprehensive turnaround plan expected to unfold over the next 18 months.

The company's strategy is anticipated to result in low double-digit revenue declines and a roughly 65% decrease in adjusted earnings per share (EPS) for the fiscal year 2025.

The management of Under Armour has outlined a plan to reignite the brand's appeal by focusing on the core needs of athletes, particularly in men's apparel. This marks a shift away from the previous CEO's emphasis on footwear and women's categories. The company's new direction is aimed at revitalizing the brand's connection with its target market.

Despite the potential benefits of Under Armour's strategic reset, Truist Securities expressed caution, noting the significant risks involved and the necessity for strong execution across all aspects of the business. The firm's stance remains cautious, opting to continue with a Hold rating until there is clearer evidence of sustained brand improvements that can drive consistent demand.

Under Armour's recent announcement and the subsequent price target adjustment reflect the company's efforts to adapt to changing market conditions and consumer preferences. The brand's decision to concentrate on its foundational athletic wear offerings is a strategic move to strengthen its position in a competitive industry.

The market will be watching closely to see if Under Armour's turnaround efforts will translate into improved financial performance and whether the company can effectively execute its new strategy to achieve the desired results.

InvestingPro Insights

Under Armour's recent strategic shift is an attempt to stabilize its brand and financials, and the latest data from InvestingPro offers a snapshot of the company's current standing. With a market capitalization of $2.91 billion and a P/E ratio sitting at a modest 7.23, Under Armour is trading at a low earnings multiple, which might appeal to value-oriented investors.

The company's ability to cover interest payments with its cash flows and its liquid assets surpassing short-term obligations suggests a solid financial foundation, aligning with the management's focus on core business strengths.

InvestingPro Tips suggest that while the stock price has experienced significant volatility, analysts are optimistic, predicting profitability for Under Armour within the year. These insights could be valuable for investors weighing the risks against the potential rewards of the company's new direction.

For those interested in exploring further insights and tips, InvestingPro offers additional guidance on Under Armour, including 7 more tips not covered here. To access these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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