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Investing.com -- Rothschild downgraded Under Armour to Neutral from Buy, citing pressure from tariffs and a tougher industry environment that it said will delay a recovery in sales and margins.
The brokerage cut its price target to $6 from $7, noting that while the sportswear maker has taken steps to strengthen operations, external conditions have weakened.
“Under Armour has made great strides operationally,” the brokerage said, pointing to a leaner inventory, a sharper focus on marketing, and fewer promotions.
But it added that the company’s heavy exposure to North America, wholesale channels and apparel makes it highly sensitive to tariffs and shifts in consumer demand.
Rothschild said profit this fiscal year, which ends in March 2026, will be squeezed by tariff effects, with mitigation measures likely to take time. It does not see material earnings until fiscal 2028.
Beyond tariffs, the broker flagged a slower growth backdrop for global sportswear, with demand maturing in North America, softer trends in China and rising competition from brands such as Anta, Li Ning, On, Hoka, New Balance and Lululemon.
The $6 target implies a valuation of 0.5 times projected 2026 sales, compared with more than 1 times typically for larger, more balanced peers, Rothschild said.