Bullish indicating open at $55-$60, IPO prices at $37
Tuesday, Under Armour Inc (NYSE:UAA) received positive remarks from Stifel analysts, highlighting that the company’s turnaround efforts seem to be on course. The stock has shown strong momentum recently, gaining nearly 9% over the past week, though InvestingPro data shows it remains down about 37% over the past six months. According to InvestingPro analysis, the stock currently appears undervalued relative to its Fair Value. The sports apparel firm reported its fourth-quarter results for fiscal year 2025, which aligned with adjusted earnings per share (EPS) expectations at -$0.08. Revenue surpassed estimates, coming in at $1,181 million—a decline of 11.4% year-over-year but less than the anticipated decrease. This figure also beat Stifel’s projection of $1,162 million and the Street’s forecast of $1,165 million. InvestingPro data reveals the company maintains strong liquidity with a current ratio of 2.01, indicating healthy short-term financial stability. Two key InvestingPro Tips highlight that the company operates with moderate debt and maintains liquid assets exceeding short-term obligations. (Subscribers can access 6 additional exclusive ProTips on the platform.)
The company’s gross margin showed notable improvement, increasing by 170 basis points year-over-year to 46.7%, which was above both Stifel’s estimate of 45.8% and the Street’s expectation of 46.0%. For the first quarter of fiscal year 2026, Under Armour (NYSE:UA) provided guidance for adjusted EPS in the range of $0.01 to $0.03, which is favorable compared to the Street’s consensus of $0.00. However, the company anticipates a revenue decline of 5% to 4% year-over-year due to tariff impacts, and has not issued a full-year 2026 guide due to macroeconomic uncertainties. For deeper insights into Under Armour’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Stifel’s commentary focused on the necessity for Under Armour to achieve top-line growth in order to sustain earnings growth. The analysts expressed a cautious optimism that an inflection in North America could contribute to a return to growth, particularly against easier comparisons in the second quarter of fiscal year 2026, which ends in September 2025.
The analysts also mentioned that the progress in underlying gross margin was encouraging and indicated that they would be looking for details on gross tariff impacts and mitigation strategies during the earnings call. These insights would help inform their estimates of the company’s earnings power, taking into account the effects of tariffs.
In other recent news, Under Armour reported fourth-quarter fiscal year 2025 results that aligned with expectations, showing an earnings per share (EPS) of -$0.08, while revenue performed slightly better than anticipated, declining by 11.4% compared to the projected 11.5%. The company’s gross margin increased by 165 basis points to 46.7%, exceeding forecasts. However, selling, general, and administrative expenses rose by 7.5%, surpassing predictions. Under Armour’s guidance for the first quarter of fiscal year 2026 suggests revenue projections below Wall Street forecasts, but EPS is expected to be slightly higher due to improved profitability.
Analysts from Truist, Raymond (NSE:RYMD) James, and Citi have maintained their respective ratings on Under Armour, with price targets set at $9 and $6. Moody’s Ratings downgraded Under Armour’s credit rating to Ba3, citing expectations of decreased earnings over the next 12-18 months due to weakened consumer spending and increased tariff costs. The downgrade reflects challenges in executing the company’s turnaround strategy amidst a negative outlook. Despite these challenges, Under Armour’s relatively low level of funded debt and strong brand presence provide some credit support.
Additionally, the Asia-Pacific region reported a concerning 27% revenue contraction, significantly worse than expected, while North American sales decreased by 11%, performing better than anticipated. The company is focusing on margin and cost control, with adjusted SG&A expenses planned to decrease in the mid-single digits. Citi analysts have highlighted Under Armour’s weak brand positioning and limited pricing power as obstacles to a successful turnaround.
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