Under Armour Outperforms in Q3; Shares Up 16.5%


Despite the ongoing supply chain difficulties, Under Armour, Inc. (UAA) reported outstanding third-quarter results. Driven by robust demand for its offerings and efficient logistics management, the stellar Q3 performance pushed shares up 16.5% to close at $25.60 on November 2.

Under Armour is a manufacturer and marketer of branded athletic performance apparel, footwear, and accessories. The company has a market cap of $11.11 billion, and shares have gained 73.3% over the past year.

The company reported adjusted earnings of $0.31 per share, up 19.2% year-over-year and 16 cents higher than analyst estimates of $0.15 per share.

Similarly, revenue climbed 8% year-over-year to $1.54 billion, surpassing Street estimates of $1.48 billion. Apparel revenue, a major contributor to total revenue, grew 14% year-over-year, while footwear revenue increased 10%. However, Accessories revenue fell 13% year-over year .

Commenting on the results, Patrik Frisk, President and CEO of Under Armour, said, “With industry-leading innovations, increased marketing efforts to deepen our connection with Focused Performers, and consistent operational discipline – we’re building greater brand affinity and are on track to deliver record revenue and earnings results in 2021.”

Based on the continued business momentum, UAA updated its outlook for FY 2021. The company now expects revenue to grow by 25% compared to FY 2020, backed by percentage growth in the high-twenties and mid-thirties in North America and International business, respectively.

Moreover, the updated guidance forecasts adjusted earnings of $0.74 per share compared to the consensus estimate of $0.55 per share. (See Insiders’ Hot Stocks on TipRanks)

Impressed with Under Armour’s solid quarterly performance, Williams Trading analyst Sam Poser lifted the price target on the stock to $39 (52.3% upside potential) from $29 while maintaining a Buy rating.

Poser said, “The better-than-expected 3Q21 is indicative of increased consumer demand, and management’s focus on building Under Armour for long strength rather than short term growth. The increased demand was and continues to be the result of improved, more compelling product offerings, and ongoing improvements in product segmentation and product allocation, so supply stays below demand.”

The analyst noted that UAA is efficiently managing the supply chain disruptions, as well as undertaking solid marketing strategies, which will continue to increase consumer demand and build long-term brand health for the company.

Overall, the stock has a Moderate Buy consensus rating based on 8 Buys, 6 Holds, and 1 Sell. The average Under Armour price target of $28.50 implies 11.3% upside potential to current levels.

TipRanks data shows that financial blogger opinions are 80% Bullish on UAA, compared to a sector average of 71%.

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