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BMO Capital keeps outperform rating on Under Armour shares amid CEO transition

EditorIsmeta Mujdragic
Published 03/14/2024, 10:08 AM
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On Thursday, BMO Capital maintained its Outperform rating and $12.00 price target for Under Armour (NYSE:UA), Inc. (NYSE:UAA). This affirmation comes as the company experiences a significant leadership change, with founder Kevin Plank returning to the CEO position. Plank replaces Stephanie Linnartz, who has been at the helm since early 2023.

Under Armour's board decided to bring back Plank, signaling a shift in strategy. The company acknowledged Linnartz's contributions, which included key hires in product design, supply chain, consumer connectivity, and regional management, as well as the launch of UA Rewards. Despite these initiatives, the board opted for a change in leadership.

The return of Kevin Plank is not seen as a temporary measure. BMO Capital anticipates that Plank is eager to reassume the CEO role and drive the company forward. However, the firm notes that with the latest executive team change, the onus is on Under Armour's management to execute effectively and demonstrate that the company can avoid repeating past mistakes.

As the sportswear brand faces this transition, investors and analysts will be closely monitoring the impact of Plank's leadership on the company's performance. The sustained Outperform rating and price target reflect a degree of confidence in Under Armour's potential under its reinstated CEO.

InvestingPro Insights

As Under Armour (NYSE:UAA) navigates through a significant leadership change with Kevin Plank retaking the CEO role, investors are keenly observing the company's financial health and market performance. According to InvestingPro, the market cap of Under Armour stands at $3.09 billion, with a P/E ratio of 8.63. This valuation suggests that the market has priced the stock with an expectation of earnings growth, which is further underscored by a PEG ratio of just 0.05, indicating potential undervaluation relative to the company's earnings growth prospects.

Analyzing the company's profitability, Under Armour has reported a gross profit margin of 45.73% over the last twelve months as of Q3 2024, which is robust for the industry, showcasing the company's ability to maintain profitability amidst market fluctuations. This is complemented by the fact that Under Armour has been profitable over the last twelve months, with a basic EPS (Continuing Operations) of $0.91.

InvestingPro Tips reveal that while analysts have revised their earnings expectations downwards for the upcoming period, the company's stock price movements are quite volatile. However, it's worth noting that Under Armour's cash flows can sufficiently cover interest payments and liquid assets exceed short-term obligations, indicating a solid financial position. Additionally, the company operates with a moderate level of debt and does not pay a dividend to shareholders, allowing for potential reinvestment into growth and operational strategies.

With 23 analysts revising their earnings downwards, it's essential for prospective investors to keep an eye on these dynamics. The InvestingPro platform offers 7 additional tips for Under Armour, which can provide deeper insights into the company's financial outlook. To access these insights and more, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With the next earnings date slated for May 7, 2024, stakeholders will be watching to see if the leadership transition will translate into positive momentum for the company.

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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