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. 

The Price Action 

Under Armour shares were up 2.15 percent Monday afternoon at $24.21. 

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Photo courtesy of Under Armour.