Stifel cuts outlook on Under Armour as turnaround faces delays
Investing.com -- Brokerage firm Stifel downgraded Under Armour to “Hold” from “Buy” and slashed its price target to $6 from $9, citing a longer-than-expected turnaround and mounting pressure on profitability.
In a research note published Tuesday, Stifel said the athletic apparel maker’s recovery faces headwinds from rising SG&A expenses, slowing revenue momentum, and a shift toward a more leveraged balance sheet. The firm also cut its FY27 adjusted EPS estimate to $0.12 from $0.24 and lowered FY28 expectations to $0.20 from $0.45.
The downgrade followed Under Armour’s fourth-quarter FY26 results, where revenue slipped 0.8% year-over-year to $1.17 billion, while adjusted diluted EPS came in at a loss of $0.03, missing Stifel’s expectations. Gross margin also contracted 360 basis points to 43.1%, hurt by U.S. tariffs, promotional activity, and supply chain disruptions.
Stifel warned that Under Armour’s increased investment spending, particularly in marketing tied to its premiumization strategy, raises the hurdle for sustainable earnings growth. The firm highlighted planned low-single-digit SG&A growth in FY27 and an additional $30 million in marketing investments as key concerns.
The company’s FY27 guidance also disappointed. Under Armour expects annual revenue to decline slightly and adjusted EPS to range between $0.08 and $0.12, below prior analyst expectations. North America sales are projected to decline in the low-single digits amid softer wholesale demand and a cautious retail environment.
Stifel noted that while Under Armour remains a credible global athletic brand with strong recognition, visibility into achieving meaningful revenue acceleration remains limited given intense competition and slowing international growth trends.
The brokerage added that Under Armour’s financial profile has weakened, pointing to a rise in total debt to $1.19 billion and a swing to net debt from a prior net cash position.