Piper Jaffray Raises Price Target on Under Armour Inc (UA) Following Solid Q2 Results

Piper Jaffray analyst Erinn Murphy weighed in on shares of Under Armour Inc (NYSE:UA), reiterating a Hold rating, while raising the price target from $35 up to $40, on the back of solid second-quarter results and a positive forecast looking into the future. The sportswear giant reported $0.01 in earnings per share on $1.00 billion in revenue, compared to consensus estimates of $0.03 in EPS on revenue of $1.00 billion.

The analyst just had a phone update from UA management, offering insight into their issued guidance for this upcoming third quarter. Murphy is satisfied to see inline growth for inventory with sales, a trend UA management has every reason to believe should continue into the next quarter. Under Armour has reiterated guidance for this fiscal year of $4.925 billion and income in a range between $440 and $445 million. Murphy’s earnings per share for 2016 have been raised from $0.56 to $0.58. Currently, the analyst explains that though her earnings per share forecast of $0.73 remains unchanged, she finds has not integrated the catalyst of UA joining forces with Kohl’s into these estimates.

Murphy explains, “We were pleased by inventories, which were back inline with sales growth.” Especially in light of Under Armour’s new partnership with Kohl’s announced yesterday set to launch in the Spring of 2017, Murphy predicts this will prove to be a positive driving force for UA, “as it provides another leg of distribution growth for the company.”

Meanwhile, Murphy points to a new brand house in progress for UA on New York City’s Fifth Avenue that will likely help bolster revenue once it launches. Additionally, Under Armour management indicates it already had a UAS sportswear initiative set to launch this coming September, another high-end placement designed for specialty-seeking consumers.

Also strong in UA’s court, Murphy notes international business as a major positive catalyst. Consider that Under Armour’s business in the UK alone have doubled in size for year-over-year, and by year’s end, China is raring to “eclipse the size of the UK.” Combined with continued momentum in UA’s footwear sales, particularly with the new Steph Curry 3 launching this coming fall, and UA’s sales for the women’s department continuing its stellar performance of $1 billion in business, long-term looks favorable for UA and its investors.

According to TipRanks, Erinn Murphy has a ranking of #3,903 out of 4,087 analysts, with a 41% success rate and an average loss of 6.7% per each recommendation she makes.

TipRanks analytics indicate UA as a Moderate Buy. Note that of 20 analysts who have provided ratings in the past 3 months for the stock, 11 rate a Buy, 8 maintain a Hold, and 1 issues a Sell. The 12-month average price target for Under Armour is $47.50, with a 20% upside from where shares last closed.

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