Piper Jaffray Remains Sidelined After Under Armour (UA) Reports Strong Sales Driven by Footwear and Int'l Growth
Piper Jaffray reiterated a Neutral rating on Under Armour, Inc. (NYSE: UA), and raised the price target to $70.00 (from $64.00), following the company's 4Q earnings report. Sales were clearly better than anticipated, driven by footwear and international growth. The outperformance was driven in large by the introduction of the Stephen Curry II in late fall of last year.
Analyst Erinn Murphy commented, "We remain Neutral on shares of UA following the company's Q4 results. While sales were clearly better than we anticipated--driven by footwear and international growth, we believe wholesale sales were propped up by incremental business with the off-price channel which will likely carry over into 1H. DTC business decelerated to 25% growth in the quarter against a 31% store growth. We believe comps were negative during Q4, likely exacerbated by weather & tough retail traffic. Nonetheless, on what was a solid quarter and better 1H sales visibility (guidance: high-20% growth), shares moved up markedly in yesterday's session. While we are adjusting our PT from $64 to $70, our estimates are unchanged. We are hard pressed to see FY16 gross margin fully recover from the 150 bps decline in Q1 and note that elevated inventory and a significant build in accounts receivable give us some pause."
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Shares of Under Armour, Inc. closed at $84.07 yesterday.