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Wednesday, Citi analysts maintained a Neutral rating on Under Armour (NYSE:UA), Inc. (NYSE:UAA) with a steady price target of $12.00, ahead of the company’s third-quarter earnings report expected before the market opens on February 6, 2025. According to InvestingPro data, the stock currently trades at $8.21, suggesting potential upside based on the Fair Value model. The stock has shown notable volatility, with a 17% gain over the past six months despite recent challenges. The analysts predict that Under Armour will surpass third-quarter earnings per share (EPS) estimates due to improved gross margins and lower selling, general, and administrative (SG&A) expenses, though sales are projected to meet expectations.
Under Armour’s management is anticipated to increase their fiscal year 2025 EPS guidance following the third-quarter performance, while their fourth-quarter outlook is likely to remain largely the same. Citi’s analysis highlights that while the company might see EPS growth this year driven by cost control and stronger gross margins, sales continue to struggle, particularly in North America with an expected 13% decline in fiscal year 2025. InvestingPro data reveals a healthy current ratio of 2.18 and moderate debt levels, though revenue declined by 7.9% in the last twelve months.
The company has indicated that the second half of 2026 will showcase new products and innovations on a larger scale, which suggests continued sales challenges for approximately three more quarters. However, margin strength is expected to remain, with InvestingPro showing a robust gross profit margin of 46.8%. The uncertainty surrounding the turnaround in North America is significant, but given the low expectations, any EPS growth could limit the downside risk to the stock. The analysts express a cautiously optimistic view leading into the third-quarter earnings but maintain their Neutral stance on Under Armour shares. For deeper insights into UAA’s valuation and financial health metrics, including exclusive ProTips and comprehensive analysis, investors can access the full Pro Research Report on InvestingPro.
In other recent news, Under Armour has been the subject of multiple analyst assessments and adjustments. UBS has decreased the company’s stock price target to $15, maintaining a Buy rating. This revision comes ahead of Under Armour’s anticipated third-quarter earnings report, with expectations of earnings per share aligning with current predictions. In contrast, Argus analysts have downgraded Under Armour from Buy to Hold, citing ongoing post-pandemic challenges. Despite this, TD Cowen has expressed optimism for a product-led turnaround, maintaining a Hold rating but raising the price target to $11.
Under Armour has also experienced mixed reactions following its recent earnings and revenue results, reporting a decrease in Q2 revenue by 11% to $1.4 billion, despite exceeding expectations in terms of operating income and earnings per share. Other analyst firms such as Raymond (NSE:RYMD) James and BMO Capital have maintained Market Perform and Outperform ratings respectively, while Morgan Stanley (NYSE:MS) reiterated an Underweight rating.
These are recent developments following Under Armour’s Investor Day, which provided a qualitative overview of the company’s strategy. The company has maintained its third-quarter fiscal year 2025 and full-year 2025 guidance, with a strategy to generate higher quality revenue and elevate the brand’s status. Under Armour is now focusing on a more premium market position and enhancing its direct-to-consumer channels.
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