The Under Armour logo is displayed on a clothing hang tag
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Under Armour stock has soared in recent months, and Wells Fargo argues that there’s more reason than ever to be confident in the athletic-gear maker’s “compelling turnaround story.”
Analyst Tom Nikic reiterated an Overweight rating and $30 price target on Under Armour (ticker: UAA) stock Monday, following calls with a former merchandising manager at the company, who has also worked with other high-profile retailers. He writes that the discussion left him feeling “positive on the direction of the business.”
Nikic highlights the company’s strategy of catering to “focused performers,” which looks like the right one at the time: While only about a third of the global athletic market caters to serious athletes, Under Armour’s ability to prove itself as a best-in-class performer should be the company’s first priority. After that, its cachet will help the company expand in other categories.
On a related note, Under Armour has also seen success with its recent running products, especially those geared to specialty running categories. While it’s not a given that the company will be able to scale their success to the broader running market while still maintaining credibility with its core customer of serious runners, it’s a promising opportunity.
In addition, he likes CEO Patrik Frisk, who’s had a little more than a year on the job. Nikic’s industry expert likes Frisk’s strong track record, and focus on fiscal responsibility and accountability, and while it’s taken time, it appears his vision is starting to pay off for the company.
Finally, one key area will be to bring more high-profile brand ambassadors into the fold, especially as basketball star Steph Curry is “probably closer to the end of his career than the beginning.” Finding a roster of new athletes to be the faces of the brand will be a big part of Under Armour’s ongoing success, he writes.
Under Armour stock is up 1.80% to $23.80 in Monday morning trading. The shares have jumped more than 36% year to date, and are up 154% in the latest 12 months. The stock recently got a boost from much better-than-expected earnings, which has fueled upbeat analyst sentiment.
Write to Teresa Rivas at [email protected]
