U.S. Markets close in 4 hrs 45 mins

Morgan Stanley Downgraded Under Armour to ‘Underweight’

Gabriel Kane

Yesterday’s Consumer Pops and Drops: UA, VFC, BC, HOG, HBI, and PF

(Continued from Prior Part)

Under Armour’s price movement

Under Armour (UA) has a market cap of $15.1 billion. After Morgan Stanley downgraded the stock to “underweight,” Under Armour fell by 6.7% to close at $69.96 per share as of January 11, 2016. The price movement on a weekly, monthly, and YTD (year-to-date) basis is -12.2%, -18.9%, and -13.2%, respectively.

Technically, the stock broke the support. It’s trading below all of the moving day averages. Currently, Under Armour is trading 13.7% below its 20-day moving average, 19.6% below its 50-day moving average, and 21.1% below its 200-day moving average.

The Guggenheim S&P 500 Pure Growth ETF (RPG) invests 1.3% of its holdings in Under Armour. RPG tracks an index of mainly large and mid-cap stocks with strong growth characteristics. The index selects companies from the S&P 500 Index based on three growth factors. RPG’s YTD price movement is -6.7% as of January 8, 2016.

Under Armour’s competitors and their market caps are:

  • Nike (NKE) – $101.4 billion
  • Skechers USA (SKX) – $4.2 billion
  • Columbia Sportswear (COLM) – $3.2 billion

Morgan Stanley downgraded Under Armour

Morgan Stanley downgraded Under Armour from “equal-weight” to “underweight.” It set the price target at $62 from $103 per share due to the performance of the women’s apparel segment.

Under Armour’s performance in fiscal 3Q15

Under Armour reported fiscal 3Q15 net revenue of $1,204.1 million—a rise of 28.4% compared to net revenue of $937.9 million in fiscal 3Q14. Its net income and EPS (earnings per share) rose to $100.5 million and $0.45, respectively, in fiscal 3Q15—compared to its net income and EPS of $89.1 million and $0.41, respectively, in fiscal 3Q14.

Meanwhile, its cash and cash equivalents fell by 36.1%. Its inventory rose by 36.1% in fiscal 3Q15—compared to the same period last year.

Under Armour’s PE (price-to-earnings) and price-to-sales ratios are 72.1x and 4.1x, respectively, as of January 11, 2016.

Projections

The company made the following projections for fiscal 2015:

  • net revenue of ~$3.9 billion with 27% growth over fiscal 2014
  • operating income of ~$408 million with 15% growth over fiscal 2014

Continue to Next Part

Browse this series on Market Realist: