Under Armour's Stock Poised for a Major Breakout
Despite some analyst doubts, many believe Under Armour's stock has significant growth potential ahead.
After enduring several challenging years marked by sharp declines, Under Armour Inc. (UAA) has defied expectations in 2018, soaring over 40% since the beginning of the year. Although the stock remains about 60% below its 2015 peak and skepticism lingers among some analysts regarding the recent surge, Stifel analyst Jim Duffy remains bullish. He views this quarter as a crucial "stepping stone toward stabilization" for a brand whose core strength and appeal remain strong. Early last week, Duffy reaffirmed his Buy rating and set a $27 price target, signaling an additional 31% upside from Tuesday's closing price, as reported by Barron's.
Margin Recovery in Progress
Duffy's positive outlook came before the announcement that Calvin McDonald, formerly an executive at Sephora, will assume the role of CEO starting August 20. He replaces the previous CEO who stepped down in February, marking a new chapter for the company.
Facing Competitive Headwinds
While a rebound in North American sales is promising, Under Armour must also prioritize its international expansion, especially in China, which Deutsche Bank identifies as a key driver of future growth. However, the company faces stiff competition both domestically and globally from major players. (For more details, see: Under Armour to Accelerate International Sales: Deutsche Bank.)
Earlier reports highlighted Under Armour's loss of sneaker market share to Adidas. Additionally, Nike's recent earnings report at the end of June revealed a "return to growth in North America," according to CNBC. To stay competitive against giants like Adidas and Nike, Under Armour must continue to innovate aggressively.
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