Citi maintains Under Armour stock neutral with $6 target

Tuesday, on Wall Street, Citi analysts reiterated their Neutral rating on Under Armour (NYSE:UA), Inc. (NYSE:UAA) with a steadfast $6.00 price target. According to InvestingPro data, the stock currently trades at $6.21, showing significant momentum with an 8.95% return over the past week. InvestingPro analysis suggests the stock is currently undervalued. The commentary from Citi highlighted Under Armour’s fourth-quarter earnings per share (EPS) of ($0.08), which aligned with consensus expectations. The company’s reported sales showed an 11% improvement over consensus estimates, which had anticipated a 12.5% decrease. This unexpected performance was partly attributed to stronger sales in North America, despite an overall weak showing. InvestingPro data reveals the company maintains a healthy current ratio of 2.01, indicating strong short-term financial stability.

Under Armour’s gross margin (GM) saw a 170 basis point increase, surpassing consensus predictions of a 90 basis point rise. However, this was tempered by a higher than expected selling, general, and administrative expense (SG&A), which grew by 7.5% compared to the consensus forecast of 4%. Looking ahead, management’s guidance for first-quarter sales indicates a 4-5% decline, which is more pessimistic than the consensus estimate of a 1% drop. Nonetheless, the earnings per share guidance for the first quarter is slightly more optimistic, ranging from $0.01 to $0.03, compared to a flat consensus.

The report from Citi suggests that the first-quarter guidance implies a heightened emphasis on margin and cost control, with adjusted SG&A expenses planned to decrease in the mid-single digits. This strategy may be well-received by the market, especially after higher spending in the second half of 2025 impacted earnings. Despite the positive reaction anticipated for today, Citi’s analysis indicates that there are still numerous uncertainties surrounding Under Armour’s brand direction in North America, including whether an inflection point might be reached in the second half of 2026 and how the company plans to handle tariffs.

In other recent news, Under Armour has been the focus of several significant developments. Citi analysts have maintained a Neutral rating on Under Armour with a price target of $6, anticipating that the company will surpass fourth-quarter earnings per share expectations due to stronger gross margins and lower expenses. However, they expect the company to guide lower sales in the first quarter and foresee an EPS below consensus due to weaker gross margins. In another development, Moody’s Ratings has downgraded Under Armour’s corporate family rating to Ba3 from Ba2, citing expectations of decreased earnings over the next 12-18 months. This downgrade also affects several other ratings, including the probability of default and senior unsecured notes ratings, with the outlook remaining negative. The downgrade is driven by weakened consumer discretionary spending and increased tariff costs, which could challenge Under Armour’s turnaround strategy. Despite these challenges, Under Armour is expected to maintain adequate liquidity, supported by solid cash balances and full access to its $1.1 billion revolver. The company’s relatively low level of funded debt provides some credit support, though the negative outlook persists due to uncertainties surrounding tariffs and consumer spending.

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