Analyst John Kernan from TD Cowen maintained a Hold rating on Under Armour and decreased the price target to $5.00 from $6.00.
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John Kernan has given his Hold rating due to a combination of factors impacting Under Armour’s financial outlook. The company’s gross margin strategy has been negatively affected by tariffs and weak demand, leading to a significant cash burn projected at $126 million in fiscal year 2026. This situation, coupled with a $600 million debt repayment, could result in an unusually low cash balance unless there is an improvement in working capital flows.
Additionally, Under Armour’s wholesale and direct-to-consumer sales have shown declines, with particular weakness in footwear and certain apparel categories. Although the company is aiming to sell more products at full price and reduce SKUs, these efforts are still in progress. Restructuring costs are expected to be at the high end of guidance, and the company faces gross margin headwinds from tariffs. These challenges contribute to a cautious outlook, justifying the Hold rating.
Kernan covers the Consumer Cyclical sector, focusing on stocks such as TJX Companies, Ralph Lauren, and PVH. According to TipRanks, Kernan has an average return of 9.8% and a 54.74% success rate on recommended stocks.