Citi maintains Neutral on Under Armour stock with $6 target

Published 06/05/2025, 10:52
© Reuters

On Tuesday, Citi analysts maintained a Neutral rating on Under Armour (NYSE:UA), Inc. (NYSE:UAA) with a steady price target of $6.00. According to InvestingPro analysis, Under Armour currently appears undervalued, with the stock trading at a P/B ratio of 1.25 and showing a FAIR overall financial health score. The latest commentary from the firm anticipates that the company will surpass fourth-quarter earnings per share (EPS) expectations when it reports before the market opens on May 13, 2025. This forecast is based on stronger gross margins - currently at 47.5% according to InvestingPro data - and lower selling, general, and administrative expenses compared to consensus estimates, with sales projected to be in line with expectations.

Under Armour is navigating a challenging macroeconomic and tariff landscape, leading Citi to believe that management will refrain from providing EPS guidance for fiscal year 2026. For the first quarter, the analysts expect the company to guide lower sales in the low single digits and an EPS below the consensus of $0.00, due to weaker gross margins.

The analysts highlighted Under Armour’s relatively weak brand positioning, lack of momentum, and limited pricing power as obstacles in executing a successful turnaround. Despite management’s previous indications of improving trends in North America by Fall 2025, Citi analysts are skeptical and suggest that the timing might be delayed, especially as retail partners may favor brands with stronger proven momentum.

The focus for Under Armour’s management is expected to be on preserving cash flow and margins. The current sentiment towards the company is broadly negative, as illustrated in figures 4 and 5 of the report. This sentiment is reflected in the stock’s performance, with InvestingPro data showing a 32.6% decline over the past six months. However, Citi notes that much of the negativity seems to be already factored into the stock price, indicating a balanced risk/reward profile in the upcoming fourth-quarter EPS results. For deeper insights into Under Armour’s valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, Under Armour has faced a series of notable developments. Moody’s Ratings downgraded Under Armour’s credit ratings, citing expectations of decreased earnings over the next 12-18 months due to weakened consumer spending and increased tariff costs. The company’s corporate family rating was lowered to Ba3, and the outlook remains negative. Meanwhile, UBS has maintained a Buy rating for Under Armour, with a $15 price target, highlighting the company’s successful operational revamp and positive trends in its third-quarter performance. Conversely, Citi adjusted its price target for Under Armour to $8 from $12, maintaining a Neutral rating despite the company’s third-quarter earnings surpassing expectations with an EPS of $0.08. CFRA also updated its outlook, raising the price target to $5 from $4 but keeping a Sell rating, noting Under Armour’s underperformance compared to competitors. Under Armour’s third-quarter revenue was $1.40 billion, exceeding estimates by $62 million, although it was lower than the previous year’s $1.49 billion. The company’s gross margin improved by 240 basis points to 47.5%, driven by reduced discounting and lower costs. These developments reflect a mixed outlook for Under Armour, with analysts offering varied perspectives on its future performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.