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On Wednesday, BofA Securities issued an update on Under Armour (NYSE:UA), Inc. (NYSE:UAA) shares, reducing the price target to $8.00 from the previous $10.00 while maintaining a Neutral rating. Currently trading at $6.27, InvestingPro analysis suggests the stock is undervalued, despite recent challenges. The adjustment comes as the firm anticipates short-term challenges due to tariff uncertainty, which could be offset by the potential for margin recovery in the longer term.
Under Armour reported a fourth-quarter loss per share of $0.08, which met both BofA Securities’ and the Visible Alpha consensus estimates. This outcome was attributed to sales and margins that surpassed expectations but were negated by increased Selling, General & Administrative (SG&A) expenses. In response to these results, BofA Securities has revised its fiscal year 2026 and 2027 earnings per share (EPS) projections downward by $0.03 and $0.04, respectively, resulting in new forecasts of $0.37 and $0.43.
The lowered price objective is now based on a 9x fiscal year 2027 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple. This is a decrease from the previously used 12x fiscal year 2026 multiple. BofA Securities’ revised valuation reflects a more conservative outlook due to uncertainties surrounding Under Armour’s turnaround efforts.
The firm’s analysis included considerations of margin pressures expected from tariffs, projecting a 100 basis point impact. Despite these headwinds, the neutral stance suggests that BofA Securities believes the potential for Under Armour’s margin improvement in the future could balance the current risks associated with tariff-related challenges.
Under Armour’s stock price will continue to be monitored by investors as the company navigates through the evolving landscape of international trade and strives to enhance its financial performance.
In other recent news, Under Armour Inc. reported a fourth-quarter adjusted earnings per share (EPS) loss of $0.08, which met Wall Street’s expectations, while its revenue declined by 11.4%, slightly better than the anticipated 12.7% decrease. The company’s gross margin improved by 165 basis points year-over-year to 46.7%, surpassing the Street’s forecast of 46.0%. Despite these positive aspects, Under Armour’s adjusted operating margins fell short of expectations, attributed to a 7.5% year-over-year growth in selling, general, and administrative expenses. Looking ahead, the company has provided guidance for the first quarter of fiscal year 2026, projecting an adjusted EPS of $0.01 to $0.03, above the Street’s expectation of $0.00, though it anticipates a revenue decline of 4-5% year-over-year.
Analysts have weighed in on Under Armour’s performance, with Evercore ISI and JPMorgan both lowering their price targets to $6.00, citing competitive challenges and limited pricing flexibility. Meanwhile, Stifel analysts noted that the company’s turnaround efforts appear to be on track, highlighting the improvement in gross margins. Truist Securities maintained a Hold rating with a $9.00 price target, suggesting that investor sentiment may be cautiously optimistic following the earnings report. Raymond (NSE:RYMD) James also reaffirmed a Market Perform rating, acknowledging the company’s efforts to improve profitability amidst trade and macroeconomic uncertainties.
Under Armour’s management has not issued full-year guidance for 2026 due to unpredictable trade policies and macroeconomic conditions, including potential tariff impacts. The company is focusing on enhancing its product offerings and brand image to sustain earnings growth, particularly in North America, where an inflection could aid recovery. Analysts and investors continue to monitor Under Armour’s progress and future outlook as the company navigates a competitive landscape and strives for growth.
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