Investing.com -- Under Armour (NYSE:UA) announced on Wednesday its founder Kevin Plank is set to return to take the helm as chief executive officer starting at the beginning on April, succeeding Stephanie Linnartz, to steer the athletic apparel company through a challenging backdrop for sportswear makers.
Under Armour (NYSE:UAA) A stock fell over 6% in premarket trading, after closing at $8.10 on Wednesday, handing back early strong gains following the news.
As part of the leadership shakeup, Mohamed El-Erian was named as chairman. Linnartz remain as an advisor through the end of April.
Williams Trading has downgraded its stance on the sportswear retailer to 'hold' from 'buy', cutting its 12-month price target to $8 from $11, taking a spot on the sidelines as it awaits more information about the company's strategies.
"We believed that Ms. Linnartz had been taking a measured approach to reposition the Under Armour brand in the U.S. and build upon a developing strong position in international markets continues to evolve," analysts at Williams Trading said, in a note, adding that it's unlikely to hear from the new CEO before the fourth quarter earnings update in May.
Evercore ISI also downgraded its stance on the retailer to 'underperform' from 'in line', cutting its 12-month target price to $7 from $8.
"Mr. Plank’s return is a clear signal that UAA’s strategy isn’t working and supports our field work that UAA’s KPI’s continue to deteriorate in the current quarter," analysts at Evercore said, in a note.
"We think the most likely scenario Mr. Plank will pursue will include efforts to accelerate a return to N. America revenue growth (ex-COVID, NA revenues haven’t grown since 2017) ... which we think will add significant risk to the brand longer-term."
(Yasin Abrahim contributed to this article.)