It’s been a rough week for Under Armour Inc. (UA) and their shares are down 9% since Monday. On Tuesday’s (5/1) earnings call Under Armour reported Q1 07 revenue increased by 42% and their net profit rose by 14%, but it was the outlook for Q2 that made shares drop 12% in one day.
Next quarter Under Armour is expecting to have higher marketing costs that are going to eat into the bottom line. Shares of UA are trading in the middle of its 52 week range at around $44 a share. UA revised their 2007 revenue growth guidance from 25%-30% to 30%-35%, thus the dip in share price.
Wachovia raised its rating on Under Armour from "outperform" from "market perform" on Tuesday and said there is long-term growth opportunities in Europe for their footwear, women’s and outdoor gear. Yesterday Credit Suisse stood by their "outperform" rating on UA and set their target price at $65 a share.
So maybe Wall Street has been too hard on Under Armour?
They have to realize that they are not Nike (NKE), but they are gaining ground and market share every day. Under Armour is a popular brand and watching their revenue go from $281 million in 2005 to $430 million in 2006 is very impressive. Compare that to their annual revenue of $17,000 in 1996, this company is moving fast. Under Armour IPO’d back in November of 2005 at $13 a share and closed its first day at $25. It’s been on the move ever since and perhaps this latest Under Armour ad says it all…
Can you hear them coming? Don’t expect their stock to be quiet for long.
Frank Lara Jr.
Frank Lara Jr. can be reached at [email protected]; he does not own securities in the companies he covers.
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