NEW YORK (TheStreet) -- Shares of Under Armour(UA) - Get Report were declining on heavy trading volume late-afternoon Wednesday as Cowen reduced its rating on the stock to "market perform" from "outperform" after the sportswear retailer yesterday reported a drop in gross margin and provided downbeat guidance for 2017 and 2018.
The firm also cut its price target to $35 from $46, TheFly reports.
Before yesterday's market open, Under Armour said gross margin fell to 47.5% in the 2016 third quarter from 48.8% in the same period last year. The company now sees revenue increasing in the low-20% range in 2017 and 2018.
Under Armour's move to "get big fast" is putting too much pressure on margins, returns and cash flow, Cowen said, according to Barron's.
"While we are still big believers in the long-term Under Armour brand and management's direction, the competitive environment is stiffening," the firm said in an analyst note.
Also, Deutsche Bank downgraded the stock to "hold" from "buy" and reduced its price target to $32 from $50.
The firm said it's not surprised by Under Armour's expansion efforts, but feels they're being implemented faster than expected. The stock's valuation may suffer as a result of the subdued profit forecast, Deutsche Bank added.
SunTrust analysts said despite the reduced guidance, Under Armour's fundamentals are still intact, noting that the company should benefit from its launch at Kohl's (KSS).
The firm lowered its price target to $40 from $55 but maintained its "buy" rating, according to TheFly.
More than 19.87 million of the Under Armour's shares changed hands so far today vs. its average 30-day volume of 5.28 million shares per day.
(Under Armour is held in the Growth Seeker portfolio. See all of the holdings with a free trial.)
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
The team rates Under Armour as a Hold with a ratings score of C+. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, the team also finds weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and premium valuation.
You can view the full analysis from the report here: UA