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Citi cut its price target for Under Armour Inc (NYSE:UAA) (NYSE:UA) to $8 from $10, maintaining a Neutral rating in a note on Wednesday.
The firm expects the sports equipment and athletic wear company to miss expectations and guide down when it reports fiscal second-quarter earnings results on November 3.
“We anticipate UAA’s 2Q23 results (BMO 11/3) will miss consensus based on a weaker GM (our est $0.12 vs. cons $0.16),” wrote Citi. “We expect mgmt to lower F23 EPS guidance from its current range of $0.47-0.53, reflecting FX pressures and a weaker GM outlook due to elevated promo activity.”
Analysts there went on to explain that promotions in the U.S. active category have “ramped up significantly” this past quarter with Under Armour’s two largest competitors, Nike Inc (NYSE:NKE) and Adidas (OTC:ADDYY), in heavy inventory positions, “particularly in apparel.”
“We expect UAA’s sales/GM to be pressured over the next couple qtrs and for UAA’s retail partners to be conservative on future orders into spring ’23. We are not alone in our negative outlook however, with most investors we speak to assuming mgmt will have to lower the year significantly. If UAA can achieve anything better than a significant 2Q miss and F23 guide down, we believe shares react positively. We see this as unlikely,” they concluded.
