Analysts Offer Insights on Consumer Goods Companies: Under Armour (UA) and Methode Electronics (MEI)


Analysts have been eager to weigh in on the Consumer Goods sector with new ratings on Under Armour (NYSE:UA) and Methode Electronics (NYSE:MEI).

Under Armour (UA)

In a report released today, Susan Anderson from B.Riley FBR reiterated a Sell rating on Under Armour, with a price target of $9. The company’s shares opened today at $19.64.

Anderson noted:

“We reiterate our Sell rating on Under Armour (UAA) given heightened BS metrics, a promotional start to 3Q, and weak segmentation, which all put 2H expectations at risk. We performed store checks at our local DKS, M, and KSS stores, which showed UAA’s segmentation efforts still in the early stages. With the recent release of the 2Q 10Q, we look at UAA’s new accounts receivables factoring program, which we believe reflects UAA’s slower moving inventory and need to convert receivables to cash. We are skeptical of UAA’s ability to turn the business so quickly in 2H, especially given remaining product in the off-price channel and what appears to be a more promotional environment so far than we believe management contemplated.”

According to TipRanks.com, Anderson is a 4-star analyst with an average return of 7.2% and a 56.8% success rate. Anderson covers the Services sector, focusing on stocks such as Lululemon Athletica Inc, Ascena Retail Group, and Abercrombie Fitch.

Under Armour has an analyst consensus of Hold, with a price target consensus of $21.60.

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Methode Electronics (MEI)

In a report released today, Christopher Van Horn from B.Riley FBR reiterated a Buy rating on Methode Electronics, with a price target of $49. The company’s shares opened today at $40.

Van Horn wrote:

“Methode (MEI) announced on August 20, after market close, that it had agreed to acquire advanced lighting system supplier Grakon Parent, Inc. (“Grakon”) for a total consideration of $420M in a transaction that, we estimate, could be materially accretive to adj. EPS (excluding pretax acquisition and related costs). Grakon has over 1,200 employees and provides custom lighting solutions to OEM customers in the heavy-truck, bus, rail, electric-vehicle, and power- sports markets. The company has business in it generated TTM revenue of $159M, as of 7/31/18. We believe that this transaction is compelling: It would give MEI additional vehicle lighting expertise that could, in our view, complement the capabilities it has had since acquiring October 2017.”

According to TipRanks.com, Horn is a 4-star analyst with an average return of 9.7% and a 60.4% success rate. Horn covers the Industrial Goods sector, focusing on stocks such as Superior Industries International, Tower International, and Park-Ohio Holdings.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Methode Electronics with a $48.50 average price target.

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