Under Armour Shares (NYSE: UAA) Down 21.89% YTD – Beat On EPS, Gets Analyst Drops

Having dropped 21.89% YTD, Under Armour stock (NYSE: UAA) has been coming under greater scrutiny from the analyst community despite beating EPS estimates for the 4th consecutive quarter.

Best known for designing, marketing, and distributing a variety of performance apparel, footwear, and accessories, Under Armour had been aiming to take market share for industry behemoth Nike, but instead is now having to go back to the drawing board. Catering to a wide audience, including men, women, and youth, the company continues its efforts to innovate and expand its product offerings amidst evolving market dynamics but analysts have adjusted the sports apparel giant's price targets following the release of their quarterly financials.

Analysts watching Under Armour have offered varied opinions, with ratings fluctuating between “outperform” and “underperform” and price targets ranging from a modest $6.00 to a more optimistic $12.00. Under Armour's stock, therefore, continues to be the subject of intense scrutiny from investment analysts.

• BMO Capital have lowered the firm's price target on Under Armour to $10 from $12 but keeps an Outperform rating on the shares.
• Wells Fargo have lowered the firm's price target on Under Armour to $6 from $7 and keeps an Equal Weight rating on the shares.
• JPMorgan have lowered the firm's price target on Under Armour to $6 from $8 and downgraded the shares to Underweight from Neutral.
• Truist lowered the firm's price target on Under Armour to $7 from $8 and keeps a Hold rating on the shares.
• Citi lowered the firm's price target on Under Armour to $7 from $8 and keeps a Neutral rating on the shares.

The recent quarter's financial report did provide some positive news, with Under Armour posting an EPS of $0.11, which surpasses the earlier consensus estimate of $0.07 by $0.04, a 57% upside surprise. This indicates that despite the lowered expectations for Q1 2025, the company has shown the capacity to outperform predictions and could potentially continue this trend.

Nonetheless, revenue paints a different picture. Under Armour's revenue for the quarter was $1.33 billion, marking a slight year-over-year decrease of 4.7%. It points to potential challenges in sales growth and market demand that the company may need to address going forward.

The outlook is the real problem, with the firm expecting sales drops of somewhere between 15-17%, with layoffs likely needed in order to balance the books. Founder Kevin Plank, having returned to the role of CEO at the firm emphasised the need to focus

“There are too many products, too many initiatives. To reconstitute this brand, we must be highly focused”

Founder & CEO, of Under Armour Kevin Plank

Institutional investors, often seen as barometers of a stock's health and future performance, have been active with Under Armour's shares. There have been notable changes in their stakes in the company, reflecting ongoing strategic adjustments in response to market conditions and corporate performance.

While market analyst's continue their downward adjustment in Under Armour's earnings per share estimate for Q1 2025 could pose concerns for short-term investors, the overall annual consensus and the recent earnings beat might suggest a brighter long-term outlook for the company if they can get their strategy right. As a way of returning value to shareholders, the firm also is buying $500 million of UAA stock from the market which may help support sentiment in the short term.