Canaccord Genuity Raises Price Target to $105 Following Under Armour's (UA) 2Q EPS Beat
Canaccord Genuity reiterated a Buy rating on Under Armour, Inc. (NYSE: UA), and raised the price target to $105.00 (from $97.00), following 2Q15. UA reported an EPS beat of $0.07 vs $0.05 consensus.
Analyst Camilo Lyon commented, "UA's Q2 beat (7c EPS vs. 5c consensus) showcased another quarter of impressive top line momentum, with sales growth of 29% (31% ex-FX) handily beating our 24% estimate. Once again, sales growth was broad based with footwear (+40%), international (+93%) and DTC (+33) leading the charge. Gross margin contracted by 83bps, primarily due to FX and air-freight, partially offset by robust growth from DTC and Connected Fitness. In addition to strong innovation and an improving presentation at retail, UA is capitalizing on the excitement around its athletes (e.g. Steph Curry, Jordan Spieth, and Misty Copeland). To that end, we welcome the planned increase in marketing spend in Q3 as it will strengthen UA's position in key growth categories like basketball, golf, and women's. Longer term we believe this will translate into incremental revenue growth opportunities. As we anticipated, management raised both full year revenue growth guidance to 25% (from 23%) and the low-end of EBIT range to $405-$408M (from $400-$408M). With improving execution and multiple growth drivers spread across categories, channels and geographies, our conviction in UA's ability to reach $10B in sales over the next 5 years is further emboldened. We reiterate our BUY rating and raise our PT to $105."
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Shares of Under Armour, Inc. closed at $95.93 yesterday.