In a report released on August 8, Alexandra Straton from Morgan Stanley maintained a Sell rating on Under Armour, with a price target of $4.00.
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Alexandra Straton’s rating is based on several concerning factors regarding Under Armour’s financial outlook and market positioning. The company is facing significant challenges in achieving revenue growth without further deteriorating its already low earnings before interest and taxes (EBIT) margins. This situation is compounded by a highly competitive sportswear market, which is becoming increasingly fragmented, along with elevated inventory levels and tariff-related price increases.
Moreover, Under Armour’s recent quarterly results showed only slight improvements in adjusted EBIT, but sales growth in North America and overall remained stagnant. The company’s guidance for the upcoming quarter is also below market expectations, with anticipated declines in sales and profitability due to supply chain issues and additional costs. These factors contribute to the view that Under Armour may need to operate as a smaller, lower-margin business in the long term, justifying the Sell rating.
In another report released on August 8, Evercore ISI also maintained a Sell rating on the stock with a $5.00 price target.