Mizuho Securities Downgrades Under Armour, Inc. (UA) to Neutral Citing Structural Margin Challenges
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Mizuho Securities downgraded Under Armour, Inc. (NYSE: UA) from Buy to Neutral with a price target of $32.00 (from $52.00), citing structural margin challenges.
Analyst Betty Chen commented, "We are downgrading UA to Neutral and lowering our estimates and PT to $32 to reflect unexpected margin challenges from a structural change in the business. While management reiterated FY16/FY18 sales targets, we are disappointed by EBIT reduction due to: 1) commentary for flattish gross margins in FY17- FY18 due to category mix, 2) significantly lower than expected margin within footwear, and 3) unexpected plans to invest in talent/infrastructure in order to capitalize on the momentum in footwear and Int’l. Given the delayed profitability trajectory and UA’s premium multiple, we expect the shares to remain range-bound."
Shares of Under Armour, Inc. closed at $32.89 yesterday.
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