UAA: Margin Resilience Will Support Recovery Despite Current Industry Headwinds

Under Armour's analyst price target has been revised downward from $6.17 to $5.83, as analysts cite growing concerns about margin pressures, softer demand, and delayed recovery expectations in a challenging industry environment.

Analyst Commentary

Recent analyst reviews provide a mixed outlook for Under Armour as the company faces both ongoing challenges and areas of potential resilience in the current retail environment.

Bullish Takeaways

• Bullish analysts highlight Under Armour’s efforts to transform its business model as a potential driver for long-term recovery.
• There is confidence in the company’s brand strength, particularly within key athletic segments. This may support future sales stabilization.
• Cost initiatives and operational improvements are expected to help protect margins over time if market pressures ease.

Bearish Takeaways

• External challenges including tariffs are putting additional pressure on margins and creating headwinds for rebound efforts.
• Industry-wide demand softness has led analysts to reduce growth expectations and extend the expected timeline for sales and earnings recovery.
• Bears point to a deteriorating macro environment and a more cautious consumer, which are risks to execution and the pace of turnaround.
• Revised price targets reflect diminished confidence in near-term valuation improvement, given delayed recovery timelines.

What's in the News

• Under Armour lowered its earnings guidance for the fiscal year ending March 31, 2026. The company now expects an operating loss of $56 million to $71 million, compared to its previous expectation of operating income between $19 million and $34 million (Key Developments).
• Reza Taleghani was appointed Chief Financial Officer, effective February 2026. He will succeed longtime CFO David Bergman, who will remain with the company through the first quarter of fiscal 2027 to assist with the transition (Key Developments).
• The company forecasts a revenue decline of 4 to 5% in 2026. High-single-digit decreases are projected in North America and Asia-Pacific, partially offset by expected high-single-digit growth in EMEA. Excluding restructuring and transformation charges, operating income is anticipated to be between $19 million and $34 million, with a diluted loss per share ranging from $0.15 to $0.17 (Key Developments).

Valuation Changes

• Fair Value Estimate declined from $6.17 to $5.83, reflecting a lower consensus on Under Armour's intrinsic valuation.
• Discount Rate rose from 10.6% to 11.3%, which signals perceived increased risk and a higher required rate of return by analysts.
• Revenue Growth forecast increased from 1.5% to 3.0%, indicating slightly improved expectations for future sales expansion.
• Net Profit Margin improved from 3.6% to 4.2%, suggesting analysts anticipate stronger profitability relative to sales.
• Future P/E Ratio dropped from 18.3x to 13.9x, indicating a lower valuation on future earnings amid revised market sentiment.