The company lowered 2017 sales guidance and announced a restructuring plan that will see a 2 percent cut in its workforce.
Under Armour recently hit a new 52-week low, and shares are down over 37 percent year to date.
Following the second-quarter report, Buckingham Research has reiterated its Underperform rating on Under Armour and cut its price target from $15 to $14, implying a 23-percent downside from current levels.
4 Reasons To Be Cautious On Under Armour
At current levels, Krasik sees the risk–reward as unfavorable, as the company is no longer growing in the U.S. and the lack of footwear growth poses some concerns regarding the company’s aggressive growth ambitions.
Under Armour appears to have blown its opportunity to emerge as the sole No. 2 player in the athletic apparel industry. During the company’s rise in 2014–2016, the industry was ripe for a key player to come in and challenge Nike Inc (NYSE: NKE); consumers were looking for a different brand, and for some time, it appeared that Under Armour was one to do it.
Instead, adidas AG (ADR) (OTC: ADDYY) took advantage of the gap by improving its product lineup and changing its sentiment. Those two changes have made a huge mark on the industry in a short time. The company has raised guidance at a time when its competitors are cutting jobs and lowering forecasts, and the market has reacted in turn. Shares of Adidas are up 45 percent year to date.
Product first, Always, always, always. that's why Adidas is winning.
— Matt Powell (@NPDMattPowell) July 28, 2017
See more from Benzinga © 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
See more from Benzinga
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.