UPDATE: Cowen Downgrades Under Armour, Inc. (UA) to Market Perform
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(Updated - October 26, 2016 7:56 AM EDT)
Cowen downgraded Under Armour, Inc. (NYSE: UA) from Outperform to Market Perform with a price target of $35.00 (from $46.00). The change follows the release of Q3 results and long-term guidance.
Analyst John Kernan said, "UA's margin contraction into 2018 was not part of our thesis and we are downgrading shares to Market Perform and lowering our price target to $35. With a more competitive industry and lack of margin expansion until the brand gains more scale, we see consensus estimates that need a multi-year cut while EPS, ROIC and free cash flow by 2020 don't imply meaningful upside to the $14.7B market cap."
The analyst added, "UA's call to action of "Get Big Fast" is requiring a level of investment that will pressure margins and returns. Retail partners, in a slowing N. American market, are managing leaner inventory profiles while product flows are likely to see structural change through next year, pressuring sell-in as the consumer demands faster flows. UA maintained its FY18 sales target of $7.5B but substantially reduced its operating income target to ~$585MM vs. our prior estimate of $760MM."
Shares of Under Armour, Inc. closed at $32.89 yesterday.
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