Under Armour Delivers Much-Needed Q1 Sales Beat

Under Armour Inc UAA is confident in the trajectory of its turnaround strategy, according to Cowen.  

Shares of the Baltimore-based apparel brand are moving higher after it reported a much-needed first-quarter sales beat Thursday and raised its 2019 guidance.

The Analyst 

John Kernan maintained a Market Perform on Under Armour and raised the price target from $21 to $23.

The Thesis

Under Armour’s restructuring efforts and brand positioning around the "Focused Performer" are paying dividends in the form of an improving gross margin trend and expense management, Kernan said in a Thursday note. 

“Given management's enthusiasm over the progress of its transformation since 2017, its improved go-to-market strategy and reception to its product innovation cycle across apparel and footwear, we think the updated FY19 guidance appears conservative,” the analyst said. 

“This leaves room for consensus estimates to move higher throughout the year even with prospects for UAA to further reinvest behind its growth. “

Under Armour continues to focus on more premium and full-price offerings, having achieved wins with its HOVR footwear platform, Kernan said. HOVR is expanding to five styles in running from two this spring and is expected to add additional styles in fall of 2019.

The Sportstyle category has benefited from the addition of the HOVR SLK and Forge 96 models, which draw from streetwear inspiration, according to Cowen. 

Price Action

Under Armour shares were up 3.54 percent at $22.82 at the time of publication Thursday. 

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Photo by Dustin Blitchok.