Under Armour Faces Financial Challenges Amid Tariffs and Weak Demand: Analyst Maintains Hold Rating

Under Armour faces financial challenges due to tariffs and weak demand, with a projected cash burn of $126 million in FY2026. The company's wholesale and direct-to-consumer sales have declined, and restructuring costs are expected to be at the high end of guidance. Analyst John Kernan maintains a Hold rating and decreases the price target to $5.00 from $6.00.

Avis Budget Group (NASDAQ:CAR) and Under Armour (NYSE:UA) reported their Q2 2025 financial results, revealing mixed performance and challenging outlooks.

Avis Budget Group

Avis Budget Group, a global provider of vehicle rental services, reported a significant miss on earnings per share (EPS) for Q2 2025. The EPS (GAAP) came in at $0.10, far below the $2.21 analyst estimate [1]. Revenue (GAAP) was $3,039 million, narrowly exceeding the $2,992.6 million consensus estimate but down 0.3% from the same quarter in 2024. Operational improvements led to expanded Adjusted EBITDA and improved fleet costs, but higher restructuring expenses and margin pressure weighed on net income. The company's net income (GAAP) dropped to $4 million from $14 million in Q2 2024 [1].

Under Armour

Under Armour, a leading athletic apparel company, reported a 4% year-on-year (YoY) decline in revenue to $1.1 billion in Q1 FY26. North America sales fell 5%, while EMEA rose 10%. Footwear revenue declined 14%, but gross margin rose to 48.2%. The company recorded a net loss of $3 million, or $0.01 per diluted share, while adjusted net income stood at $9 million [2]. For Q2, revenue is expected to fall 6–7% due to tariff and supply chain headwinds.

Outlook and Analyst Ratings

Avis Budget Group's management highlighted ongoing focus on cost control, fleet optimization, and flexible adaptation to shifting demand patterns. The company aims to reach about $300 per vehicle per month in fleet costs by the start of Q4 2025 [1]. Analyst John Kernan maintains a Hold rating and decreases the price target to $5.00 from $6.00 for Under Armour, citing financial challenges due to tariffs and weak demand, with a projected cash burn of $126 million in FY2026 [2].

References

[1] https://www.aol.com/finance/avis-car-q2-eps-drops-200615333.html
[2] https://www.fibre2fashion.com/news/apparel-news/us-under-armour-posts-q1-loss-sees-7-dip-ahead-in-q2-304495-newsdetails.htm