JP Morgan Lowers Under Armour PT to $5, Maintains Underweight Rating

JP Morgan Lowers Under Armour PT to $5, Maintains Underweight Rating

Under Armour, Inc. (NYSE:UA) faced a significant setback in its first-quarter fiscal 2026 earnings report, with shares tumbling 13.6% following weak guidance that fell short of analyst expectations. The athletic apparel maker reported adjusted earnings per share of $0.02, slightly below the analyst estimate of $0.03, while revenue declined 4% year-over-year (YoY) to $1.1 billion, missing the consensus estimate of $1.13 billion [1]. The company's second-quarter outlook, projecting earnings of $0.01-$0.02 per share, was also notably lower than analyst expectations of $0.26.

Under Armour's North American revenue decreased 5% to $670 million, while international revenue declined 1% to $467 million. Footwear revenue, in particular, dropped 14% to $266 million, while apparel revenue decreased 1% to $747 million. Accessories provided a bright spot, growing 8% to $100 million. Gross margin improved by 70 basis points to 48.2%, primarily due to favorable foreign exchange, pricing, and product mix. However, the company expects gross margin to decline 340 to 360 basis points in the second quarter, largely due to supply chain headwinds and anticipated impacts from tariffs [1].

The company is currently implementing a restructuring plan announced in May 2024, aimed at improving financial and operational efficiencies. The plan is expected to cost between $140 million and $160 million, with $71 million in restructuring charges already recorded by the end of the first quarter. For the second quarter, Under Armour expects revenue to decline 6-7%, with a low-double-digit percentage decrease in North America and a low-teens percent decline in the Asia-Pacific region, partially offset by high-single-digit growth in EMEA [1].

In response to the disappointing earnings report, JP Morgan has lowered its price target for Under Armour shares to $5, while maintaining an underweight rating on the stock. The investment bank cited concerns over weak guidance, ongoing supply chain issues, and the potential impact of tariffs on the company's financial performance [2].

Under Armour's ability to navigate these challenges and execute its transformation plan will be crucial for the company's future prospects. The athletic apparel maker is facing intense competition and must continue to innovate and adapt its business model to remain competitive in the performance sportswear market.

References:
[1] https://in.investing.com/news/earnings/under-armour-shares-tumble-after-revenue-miss-weak-guidance-4953477
[2] https://www.nasdaq.com/articles/under-armour-ua-q1-revenue-falls-42