Under Armour Upgraded to Buy From Hold at Deutsche Bank

Under Armour is upgraded to buy with a $22 price target by analysts at Deutsche Bank.
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Under Armour  (UAA) - Get Report was upgraded to buy from hold by a Deutsche Bank analyst who sees opportunities for the athletic apparel maker in multiple areas and increased margins.

Shares of the Baltimore-based company were rising 1.78% to $16.25 on Thursday.

Analyst Paul Trussell, who also raised his price target to $22 from $15, forecast a 40% increase in the margin rate from 2019 levels by fiscal year 2023, as Under Armour reaps benefits "from multiple years of resetting the cost base, improving inventory control and pricing, and altering the distribution mix."

"In addition," the analyst said, "we spot green shoots on the product side with elevated footwear especially in the running category, momentum with Project Rock, a unique opportunity to grow the Curry brand, and strong technology that enhances the apparel assortment."

Trussell said that while many athletic companies saw their stocks rise in 2020, Under Armour was down 20%.

"We see opportunity for multiple expansion driven by upward earnings revisions and growing investor confidence as they execute through the turnaround," he said,

Trussell made his comments in a report on the apparel retail sector in which he also upgraded Capri  (CPRI) - Get Report and V.F. Corp.  (VFC) - Get Report to buy from hold, while upgrading Dillard’s  (DDS) - Get Report to hold from sell. All three companies were climbing at last check.

The analyst said that the coronavirus pandemic had led to material changes in the sector as stores were closed and sales were depressed.

"Ultimately, our take is that Covid has been a meaningful positive catalyst for retail margin trajectory," Trussell said, "as the pandemic forced retailers to make difficult decisions about organizational structure, real estate, and pace of digital investments while also experiencing reduced competition (through bankruptcies and store closures) and an opportunity to reset promotional activity and inventory levels."