Under Armour's (UA) 'Overweight' Maintained at Piper Jaffray Despite Long-Term Guidance
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Piper Jaffray maintained an Overweight rating on Under Armour, Inc. (NYSE: UA) with a price target of $41.00 (from $44.00). Shares declined after the company reported Q3 results and offered long-term guidance. Despite being "blindsided" by the update, analyst Erinn E. Murphy remains a "buyer" of the stock.
Murphy explained, "Clearly we and the Street were blindsided by mgmt's update to its long-term guidance on the call. Longterm guidance characteristically has been provided in an analyst day format vs. on the Q3 call. As it relates to the customary FY17 preliminary guidance that mgmt gave on this call, the low-20% sales growth was in line with expectations. That said, Q3's execution and reiteration of the $7.5B sales target were more than overshadowed by the aforementioned EBIT downside surprise."
"Investors have been particularly shocked given several met with mgmt. at the Goldman conference in early September. From our perspective, UA's sales opportunities remain robust as evidenced by the outperformance in footwear & int'l in the quarter. Had the $7.5B sales guidance been cut, our stance on the stock would have likely been different. While there is still price discovery going on in the market today, the long-term growth opportunity for the UA brand is unchanged. The key "change" is that the cost to get there is higher. We believe UA's inventory is in good shape and the market share opportunities for footwear and international remain robust," added the analsyt.
Shares of Under Armour, Inc. closed at $37.90 yesterday.
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