Cowen analyst: Under Armour stock can rise more than 50%

on Jun 23, 2021
  • Cowen's John Kernan says Under Armour Inc is one of the firm’s best small and midcap ideas.
  • The analyst sees recent pullback in UAA as a buying opportunity and reiterated his 'Buy' rating.
  • Under Armour has gained about 200% in the stock market since its multi-year low in May 2020.

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Under Armour Inc (NYSE: UAA) has tanked just under 20% since its year-to-date high of $25.53 per share in early May. According to Cowen analyst John Kernan, the recent pullback makes the stock very attractive and poses a good opportunity to take a buy position.

Shares of the company opened at $20.50 per share on Wednesday and are currently exchanging hands at $21.13 per share. Compared to its multi-year low in May 2020, when the pandemic pushed its stores into temporarily shutting down, the stock has gained close to 200%. Under Armour had started the year at a per-share price of $17.35.

Cowen’s John Kernan reiterates his ‘Buy’ rating on Under Armour

In his note to clients, Kernan said Under Armour was one of the firm’s best small and midcap ideas. He reiterated his buy rating on UAA and expressed confidence that the stock could rise more than 50% by 2022. Cowen’s bullish call was CNBC’s “Call of the Day” on Wednesday.

“The sector’s recent valuation contraction creates an improved risk/reward opportunity, particularly for UAA, which is down 20% since beating Q1 earnings. We see upside to management’s guidance, and consensus estimates into FY23. Improved marketing and go to market processes create a path to significant improvement in growth and returns on capital.”  

Under Armour topped estimates in its fiscal first quarter

The announcement comes more than a month after Under Armour published its financial results for the first quarter that topped Wall Street estimates. The Baltimore-based sports equipment company expects revenue to climb by a little under 20% this year.

Commenting on the market space at large, Liz Young, Head of Investment Strategy at SoFi, said on CNBC’s “Halftime Report”:

“You have to split the space up into athleisure, which is what we wore when we were at home, and now athletic apparel, which is what we wear when we go back out into the world and visit gyms, and that’s particularly in big cities. I think that the athletic apparel can do well through the rest of the year, and people are going to buy that a little bit more than the athleisure trade.”

Under Armour also agreed to pay $9 million to the U.S. SEC in May to settle the charge that said it misled investors. At the time of writing, the NYSE-listed company is valued at $9.01 billion and has a price to earnings ratio of 81.74.