Under Armour's Growth -- The Source Of Buy-Side Debate

Given the raging debate among the buy-side community about Under Armour Inc UA's growth potential, Barclays inspected the company's long- and short-term growth drivers and concluded that it remains bullish on the shares of the company. The firm believes heightened skepticism presents an attractive entry point.

Near Term: Bright

Analyst Matthew McClintock expressed confidence in the company's ability to exceed its 20 percent revenue growth guidance in the third quarter. Specifically, the analyst estimates revenue growth of 21.9 percent to $1.47 billion. Additionally, the analyst expects the company to benefit from a host of recently introduced new products and new iterations from the Curry franchise.

McClintock sees higher recaptured revenues from the earlier completion of the Sports Authority (TSA) liquidation. The company has also gained significant distribution within existing wholesale partners, the analyst noted.

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Intl. Strategy, Distribution: Key For Future

Barclays is also positive long term, expecting the company to meet or exceed its revenue guidance of $7.5 billion by 2018, benefiting from its international strategy. The firm also sees scope for increase in distribution.

The firm views the company's move to distribute to Kohl's Corporation KSS as a strategic move of reaching women, a relatively new customer category, rather than a move forced by saturation. According to Barclays, Under Armor is significantly under penetrated, with only 1/10th of the SKU's as Nike Inc NKE at Macy's Inc M specifically.

As such, Barclays has an Overweight rating and $55 price target on the shares of the company.

At time of writing, shares of Under Armour were down 1.82 percent at $37.82.

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