Analysts have made Under Armour (UA) - Get Report a "battleground" stock ahead of its fourth quarter results, with Deutsche Bank and SunTrust taking a bullish view and Piper Jaffray adopting a bearish stance towards the shares of the athletic apparel and footwear maker. Under Armour is slated to report its Q4 results before the market open on January 28.
BULLISH TAKE: Although Under Amour probably discounted its products more than previously expected in Q4 due to the warm weather, that development is probably well understood by investors now, wrote Deutsche Bank analyst Dave Weiner. Moreover, although the growth of the company's apparel sales probably slowed, its momentum in footwear probably did not weaken, Weiner believes. "Investors will overlook less than stellar Q4 results" if the company reiterates its 2016 guidance of 25% revenue growth and 23% operating profit growth, wrote Weiner, who cut his price target on the name to $95 from $110 but kept a Buy rating on the shares. SunTrust analyst Pamela Quintiliano was more upbeat. After the stock fell 26% over the last three months, the bad news regarding weather and increased competition is "largely priced into the shares," the analyst stated. Noting that the company is trading at valuation levels below its five year averages, the analyst says that "its fundamentals and brand integrity remain intact." She thinks the company can meet its fiscal 2018 sales target of $7.5B and views the recent weakness in the shares as a buying opportunity. Quintiliano reiterated a $110 price target and Buy rating on the shares.
BEARISH TAKE: Taking a cautious view on Under Armour was Piper Jaffray analyst Erinn Murphy. The stock is still expensive, while footwear inventories are still high. In addition to the warm weather, the company faces an overhang from Sports Authority's struggles, the analyst stated. Murphy expects the company's Q4 EPS to come in at 44c, 2c below the consensus outlook. Although Under Armour will maintain its guidance, the company's year-end inventory will be high and the stock's multiple could continue to decline, she warned. The analyst cut her price target on the name to $64 from $88 and kept a Neutral rating on the shares.
PRICE ACTION: In late morning trading, Under Armour fell 1.7% to $67 per share.
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