(By Balachander) Under Armour Inc. (NYSE:UA) shares were downgraded to "Neutral" from "Buy" by UBS Securities analyst Michael Binetti, who cited strong stock run, high valuation and diminishing outperformance.
Binetti, who has a price target of $105.00 on the stock, said UA shares are up +13 percent over the past month (+10pp of outperformance vs the apparel/footwear group).
The analyst believes strong early spring trends have decelerated slightly—leaving less upside to 2Q Street EPS estimates.
Binetti believes outperformance has diminished lately—suggesting that spring sales were pulled forward amid early warm weather in Mar/Apr. Further, the analyst said UA had been gaining share from NKE on items where NKE had raised prices too aggressively.
"A key upside risk is the potential for re-accelerating sales—which could occur based on our outlook for strong new 2H product launches (Spine, UnderBra, ColdGear Thermo, D'Stores)...Longer-term we remain optimistic that UA can expand its addressable mkt through new distribution & categories," Binetti wrote in a note.
Baltimore, Maryland-based Under Armour is engaged in the manufacture of athletic apparel and footwear.
UA shares retreated 5.44 percent to trade at $99.46 on Thursday. The stock has been trading in the 52-week range of $52.62 to $107.86.