Jefferies Upgrades Under Armour, Inc. (UAA) to Buy, Street Underappreciates Growth Opportunity

(Updated - March 24, 2017 6:41 AM EDT)

(updated to add analyst comment)

Jefferies upgraded Under Armour, Inc. (NYSE: UAA) from Hold to Buy with a price target of $27.00 (from $19.00) and added the stock to the Jefferies Franchise Pick List.

Analyst Randal Konik comments "Comparing results of our updated proprietary survey of 2,000 consumers against those 3 yrs ago show 1) the UA brand has strengthened, and 2) athletic apparel demand is robust. Our revised '18 EPS is 13% above cons., and our webscrapes, store work, and social trend analysis indicate to us an inflection has formed and the buying oppty is now. Our view is compressed valuation and neg. sentiment, ignore compelling growth over the next 2-3 years."

As for the underappreciated growth opportunity, Konik comments "We were guarded on UA during ’16 given Adidas, and UA EPS and stock are down 75% and 50%+, respectively, in 6 mo. predominantly due to share transfer. Our C'18 EPS is above cons. and recognizes N.A. stabilization, flattening GMs, int'l expansion, and category extensions--aspects not in Street ests. Given growth paths, $700M in EBITDA by ’19 appears achievable (7.5% 3-yr CAGR). Applying a 18x mult (>40% below 3-yr avg) implies 40%+ upside."

For an analyst ratings summary and ratings history on Under Armour, Inc. click here. For more ratings news on Under Armour, Inc. click here.

Shares of Under Armour, Inc. closed at $18.98 yesterday.

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