Telsey cuts Under Armour stock price target on 3Q outlook concerns

Under Armour's stock price target was reduced by investment firm Telsey, with the firm lowering its forecast to $5.00 from $5.50. Despite maintaining a Market Perform rating, the stock currently trades at $5.28. Telsey's assessment indicates that Under Armour may be undervalued, positioning it among stocks on the Most Undervalued list.

The company has been adapting its business model in response to competition, focusing on rationalizing SKUs, elevating best sellers, reducing development lead times, and cutting costs. However, ongoing promotions from rival brands, intensified competition, and higher fuel costs are negating some of these gains. Under Armour is exploring new initiatives, such as licensing its youth apparel to Centric Brands in 2027, which could free up resources and reduce inventory and working capital.

The firm also noted that Under Armour is reallocating its annual marketing budget of around $500 million towards brand and product storytelling. Although the company held steady in its fiscal 2027 earnings, revenue and operating income projections for the quarter were less optimistic than expected. Telsey's tip highlights analysts' expectation of profitability for the year, with EPS forecast at $1.24 for fiscal 2027, marking a substantial improvement from the current loss of $1.11 per share over the past year.

The reduction in the price target was based on applying a price-to-earnings multiple of about 30 times to the company's fiscal 2028 EPS estimate of $0.17.