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Shares of Under Armour (UAA - Get Report) were upgraded at Citigroup Wednesday, sending the stock rising in premarket trading. 

Analyst Paul Lejuez at Citigroup lifted his rating on the stock to buy from neutral and raised his price target to $29 from $23 as he assumed coverage of the company. The $29 per share price target is about 40% above Tuesday's closing price of $20.72.

The business is "growing up" into a more profitable stage, Lejuez said, noting the company is becoming more efficient. He said he expects a higher return on invested capital in the near future. Under Armour has had to adapt to the shifting desires of customers in athletic apparel and is doing well at that at the moment, according to Lejuez. 

Under Armour's revenue growth for much of the past decade has been around 20% a year, and Lejuez thinks that growth rate could expand. Its EBIT (earnings before interest and tax) margin was a weak 3.4% in 2018, which Citigroup expects to improve very soon, as the bank sees upside to management's gross margin guidance for full year 2019. 

The stock rose 2.61% to $21.26 a share in premarket trading. Shares have risen 16.3% so far this year.