On Friday, TD Cowen maintained a Hold rating on Under Armour (NYSE:UA), Inc. (NYSE:UAA) shares but increased the price target from $10.00 to $11.00. The firm's analyst cited an upcoming marketing campaign set to be the most significant and potentially most costly in the company's history as a key driver for the adjustment. This campaign is aimed at enhancing the brand's premium image and repositioning it in the market.
The analyst from TD Cowen adjusted the marketing expenditure projections upward to account for the anticipated costs of these efforts. Consequently, this adjustment has led to a reduction in the earnings per share (EPS) estimates for Under Armour, which are now below the consensus. Despite this, there is optimism about the company's future performance, attributed to a product-led turnaround.
The revised price target of $11.00 is based on approximately 12 times the firm's forecasted fiscal year 2027 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). This valuation reflects a balance between the potential benefits of the new marketing strategy and the acknowledgement of competitive risks in the industry.
Under Armour's strategic move to invest heavily in marketing is part of a broader effort to revitalize the brand and improve its position in the athletic apparel market. The company is focusing on product innovation and brand enhancement to compete more effectively with industry rivals.
The stock's new price target and the maintained Hold rating reflect a cautious but hopeful outlook for Under Armour's ability to execute its rebranding strategy successfully. The market will be watching closely to see how the company's investment in marketing and product development will translate into financial performance in the coming years.
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