Piper Jaffray Upgrades Under Armour, Sees Path To Sales Growth

One week after its biggest share gain in 10 years, Under Armour Inc UAA received a sell-side upgrade Monday.

The Analyst

Piper Jaffray analyst Erinn Murphy upgraded Under Armour from Neutral to Overweight with a price target raised from $20 to $32.

The Thesis

Under Armour shares are up over 60 percent year-to-date, but Murphy said the company’s sales opportunity is still underappreciated. (See her track record here.)

“Our view is the favorable industry dynamics, direct-to-consumer mix benefit and white space internationally against a more soundly run company will enable Under Armour to be on a path towards [mid-to-high single digit] sales growth over time,” the analyst said.

Under Armour made "impressive" mindshare gains in Piper Jaffray’s fall women’s survey, with the retailer ranked as the No. 2 women's brand with 17-percent share.

The change began when Patrik Frisk was hired as president and COO in July 2017, Murphy said. The executive has led initiatives including an improved go-to-market strategy, meaningfully reduced inventory levels, SKU reduction, a faster and leaner design process, sourcing partner consolidation and lower fixed costs through restructuring, the analyst said.

Under Armour still has room for improvement from a brand perspective, and the company’s focus will shift toward rebuilding the growth story with a segmented, robust product line, according to Piper Jaffray.