KeyBanc Initiates Coverage on Under Armour (UA) with a Hold; Introduces 2009-10 Estimates

May 18, 2009 8:13 AM EDT

KeyBanc initiates coverage on Under Armour (NYSE: UA) with a Hold rating.

KeyBanc analyst says, "We view Under Armour as a unique and differentiated brand with compelling long-term growth opportunities, should the Company be able to execute on them. However, in the near term and in the context of the stock's premium valuation, we struggle to make a compelling case for upside in the shares given our beliefs that: 1) 2010 consensus revenue and earnings estimates are too high (i.e., overly optimistic assumptions surrounding footwear revenue growth and operating margins) and will need to be revised downward; 2) paths for future revenue growth will be tougher to plow and higher risk relative to the past; and 3) the ultimate appeal of the Under Armour brand could prove to be limited given our contention that it lacks some of the lifestyle/cross-over appeal that has increasingly had a hand in driving success at some of its competitors...We are introducing 2009 revenue and earnings estimates of $800 million (FC = $810 million) and $0.78 (FC = $0.81), respectively, and 2010 revenue and earnings estimates of $865 million (FC = $910 million) and $0.83 (FC = $0.97), respectively."

Under Armour, Inc. (Under Armour), is engaged in the business of developing, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth.

To see more analyst ratings on UA Click Here.

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