Under Armour (NYSE:UAA) shares fell more than 3% in pre-market Thursday after Wells Fargo analysts lowered the rating to Equal Weight from Overweight.
The lowered price target to $8 per share (from the prior $12) reflects slashed FY25 EPS estimates. The analysts believe that UAA is likely to remain range bound for the next 6-12 months as the recovery story is slowly turning into a “show-me” story.
The three key drivers of the downgrade move are: 1) Outsized NA wholesale exposure (50%+ of revs), 2) elevated inventory (both UAA and in channel), and 3) recent C-Suite reshuffling (new CEO in place for <6 months, needs time to implement strategy).
“While FY24 EPS guidance is reasonable, we do see risk on the top line (flat to slightly + guide), given demand dynamics in NA & EMEA,” the analysts said in a downgrade note.
Despite a strong market rally in 2023, Under Armour shares are down over 27% year-to-date.