Analyst starts Under Armour at 'Buy'

AP News
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Posted: Dec 04, 2009 12:33 PM

Shares of Under Armour Inc. rose on Friday, following the broader markets higher, after an analyst started coverage of the athletic apparel and shoe company with a "Buy" rating and said its outlook was conservative.

In midday trading, the stock rose $1.10, or 4.3 percent, to $27.03. Meanwhile, the stock market jumped after employers cut far fewer jobs in November than anticipated.

Jefferies & Co. analyst Taposh Bari sees long-term sales growth coming from domestic and international opportunities.

Bari also expects Under Armour to attract new customers and develop new categories such as women's apparel and footwear.

Bari said shares have declined 20 percent since third-quarter earnings in late October, as strong quarterly results were overshadowed by a lower-than-expected outlook.

"Nevertheless, we believe there is a degree of conservatism to management's guidance," Bari wrote in a client note.

In October, the company said third-quarter profit rose 2 percent on higher sales of its athletic apparel and footwear. Sales of apparel rose 7 percent, and revenue from shoes more than doubled to $33 million, from $13.1 million last year.

Under Armour expects 2009 revenue between $830 million and $835 million, and 85 cents to 87 cents in earnings per share.

Analysts polled by Thomson Reuters expect earnings of 87 cents per share and revenue of $834.3 million, on average.

Bari set a $32 price target, implying the stock is expected to rise 23 percent from Thursday's closing price.