On Thursday, Evercore ISI lowered its rating on Under Armour (NYSE:UA), Inc. (NYSE:UAA) stock from In Line to Underperform. The firm also reduced its price target on the company's stock to $7.00, down from the previous $8.00. This move comes in the wake of the sportswear company's announcement that founder Kevin Plank will be reinstated as CEO, taking over from Stephanie Linnartz, who had only assumed the role in February 2023.
The firm indicated that the CEO change is a sign that Under Armour's current strategy may be faltering. According to Evercore ISI, this aligns with their fieldwork findings, suggesting that the company's key performance indicators are continuing to decline in the current quarter. The analyst expressed concern that Plank's return could signal a strategic shift that might pose long-term risks to the brand.
The analysis by Evercore ISI suggests that Plank's strategy will likely focus on efforts to reinvigorate revenue growth in North America. It is important to note that, excluding the impact of COVID-19, Under Armour's revenues in North America have not seen growth since 2017. The firm believes that such a strategy could increase the risk to Under Armour's brand over the longer term.
The downgrade to Underperform reflects Evercore ISI's stance that Under Armour's stock might not perform well relative to the broader market or within its industry sector. The new price target of $7.00 represents a decrease from the prior target, suggesting a more cautious outlook on the company's stock value.
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