While Under Armour Inc UAA has the potential for a turnaround in the longer term, it could face margin pressure from tariffs and wholesale uncertainty in the near term, according to BofA Securities.
The Under Armour Analyst: Analyst Lorraine Hutchinson reiterated a Neutral rating, while reducing the price target from $8 to $6.50.
The Under Armour Thesis: The company could generate weaker sales and lower margins through fiscal 2026 and 2027, mainly due to tariffs, Hutchinson said in the note.
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Under Armour had reported adjusted earnings in line with expectations in the first quarter, as softer sales were offset by cost control, she added.
Management guided to second-quarter sales and margins short of Street expectations, reflecting a 6%-7% decline in sales and gross margin contraction of 340-360 basis points (bps), the analyst stated.
“Management noted both the consumer and wholesale partners have been slightly more hesitant in purchasing behavior but 2Q should mark the weakest sales growth quarter of the year,” she further wrote.
UAA Price Action: Shares of Under Armour had declined by 4.50% to $5.20 at the time of publication on Monday.
Read More:
• Under Armour Analysts Slash Their Forecasts After Q1 Results
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