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TheStreet Open House

Under Armour Leaps: It Must Be the Shoes

Stocks in this article: UA

NEW YORK ( TheStreet) -- It must be the shoes.

Shares of Under Armour (UA - Get Report) were racing higher Tuesday as investors appeared stoked about the athletic apparel company's adjusted outlook and strength of its footwear line.

Shares of the Baltimore-based company were at $53.89, up 5.51, or 11.4%, and jumped as high as 13.7% after it beat top- and bottom-line estimates, improved its margins and -- why analysts believe the stock is on the move -- boosted its 2012 sales forecast to $1.82 billion, up from a previous $1.8 billion.

"No question revenues are really the driver here and they were certainly above what people were expecting in terms of the growth rate that really kind of flowed through slightly better gross margins," said Christopher Svezia, senior analyst at Susquehanna Financial Group.

The updated forecast signaled that Under Armour's new product innovation has started to pay off for a company that does about 90% of its business inside the United States.

The apparel and footwear manufacturer credited significant strength in men's, women's and youth apparel business, but one analyst said investors are probably upbeat about the success of footwear that should strengthen through 2012 and into 2013.

"I think people are encouraged by the momentum in the footwear business, specifically the launch of the Spine RPM, which sold into the stores well ... and their high-priced Highlight football cleat has reportedly come back pretty strong," said Jonathon Grassi, senior analyst at Longbow Research.

The Spine RPM is a lightweight running shoe that has a breathable upper mesh and chassis technology that runs down the center of the rubber sole like a spine. Though competitive runners wouldn't necessarily leap for this shoe, Grassi pointed out that it is aimed toward a younger demographic -- middle school, high school and college aged -- that sees the Under Armour brand and associates it with high performance athletes.

The Highlight cleat could lend its success to the shoe's biggest endorser: NFL quarterback Cam Newton. Newton, who won a national championship and Heisman Trophy at Auburn University in 2010, wore the Highlight cleat during his rookie season for the Carolina Panthers. That the football player wore the $130 cleat throughout a statistically impressive season has attracted consumers ahead of the 2012 football season.

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