On Thursday, Under Armour (NYSE:UA), Inc. (NYSE:UAA) shares, currently valued at $3.3 billion, experienced a shift in its stock rating as Argus analysts downgraded the company from Buy to Hold. According to InvestingPro data, 11 analysts have recently revised their earnings expectations upward for the upcoming period, suggesting mixed sentiment in the market.
The change comes in the wake of Under Armour's ongoing challenges post-pandemic, which have seen the company grappling with the adverse effects of retail store closures and restrictions on team sports. Despite the return of founder and former CEO Kevin Plank in May 2024 and the introduction of a restructuring program aimed at revitalizing the brand, the company's shares have remained stagnant since a sharp decline in mid-November 2021.
The restructuring plan, which focuses on brand rebuilding and the anticipation of new product launches in early 2025, has yet to deliver the intended turnaround. Under Armour's revenue declined by 7.9% in the last twelve months, with expectations set for this downward trend to persist for several quarters.
However, InvestingPro analysis indicates the company maintains strong liquidity with a current ratio of 2.18, providing some financial flexibility during this transition period. The Argus analyst noted that a reconsideration of Under Armour's rating back to Buy might occur if the upcoming new products succeed in rejuvenating the brand.
Under Armour, known for its performance apparel, footwear, and accessories, has been struggling to regain its footing in the highly competitive markets of sneakers and athletic apparel. The analyst's downgrade reflects a cautious outlook on the company's near-term prospects, despite efforts to inject new life into its offerings.
The company's stock performance has been characterized by a lack of significant movement, described as "range bound near current levels," indicating a period of limited stock price variation around a particular value. Trading at $8.10, InvestingPro's Fair Value analysis suggests the stock is currently undervalued, with analyst targets ranging from $4 to $16 per share.
Investors and market watchers will be closely monitoring the impact of Under Armour's strategic initiatives and product launches on its financial health and market position. For deeper insights into UAA's valuation and future prospects, the comprehensive Pro Research Report available on InvestingPro provides detailed analysis of the company's fundamentals and growth potential.
In other recent news, Under Armour has been the focus of several significant developments. The company has maintained its third-quarter fiscal year 2025 and full-year 2025 guidance, with a strategy to generate higher quality revenue and elevate the brand's status.
Raymond (NS:RYMD) James and BMO Capital have maintained Market Perform and Outperform ratings respectively, while Morgan Stanley (NYSE:MS) has reiterated an Underweight rating. Under Armour's Q2 results reported a decrease in revenue by 11% to $1.4 billion, although the company exceeded expectations in terms of operating income and earnings per share. The company is now focusing on a more premium market position and enhancing its direct-to-consumer channels.
TD Cowen raised their price target to $11, based on optimism for a product-led turnaround, while BofA Securities highlighted the potential in Under Armour's footwear sector. These are recent developments following Under Armour's Investor Day, which provided a qualitative overview of the company's strategy.
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