Canaccord Genuity Raises Price Target on Under Armour (UA) to $130 Ahead of 3Q Results
Canaccord Genuity reiterated a Buy rating on Under Armour, Inc. (NYSE: UA), and raised the price target to $130.00 (from $105.00), ahead of the company's 3Q earnings results. Cannaccord is projecting 3Q gross margin of 49.1%, in line with guidance. UA is scheduled to report earnings on October 22, before the market opens.
Analyst Camilo Lyon commented, "We are buyers of UA heading into its Q3 earnings report next Thursday, October 22, BMO. Not only do we believe UA experienced solid demand across key categories (men's/ women's apparel, footwear, and accessories) and regions (domestic and international), more importantly we believe it improved its sell-in execution. Recall last year, UA's ontime delivery rates during Back-to-School were sub-par, which exacerbated a weak presentation at retail in some key retail sporting goods partners. The result was likely a couple hundred basis points of sales left on the table. While more work remains, discussions with our industry contacts suggest UA's supply chain improvements this year have been yielding better on-time delivery rates and product flow, thus helping to improve the floor sets at retail. As such, we are now projecting 25% apparel growth in Q3 (up from 22% previously), increasing our Q3 EPS estimates to 45c from 42c. Overall, we believe Q3 results should be a solid demonstration of the brand's accelerating momentum. We reiterate our BUY rating and raise our price target to $130 from $105 as we roll forward our valuation onto 2017 estimates (with no change in target multiples)."
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Shares of Under Armour, Inc. closed at $101.30 yesterday.