Canaccord Lifts Q1 EPS Est. on Under Armour (UA) Ahead of Report, But Sees Potential for Additional Upside

Canaccord Genuity is positive on Under Armour (NYSE: UA) heading into the company's Q1 report, which is expected out on Thursday. The firm rates Under Armour at Buy with a price target of $65 on a split-adjusted basis.

Analyst Camilo Lyon is raising his EPS estimate from $0.02 up to $0.03, while also noting the potential for upside to the outlook.

Lyon commented, First, we believe Q1 sales growth topped our 27% estimate driven by footwear (both by solid gains in basketball and planned footwear liquidations) as well as new product introductions (Microthread Streaker - apparel; Gemini RE and Slingshot- footwear; 3D printed shoes - Architech; and Healthbox). Also, recall last year delays from the port strike and harsh winter weather hurt sales by 100-200bps, both of which compare favorably for UA. Next, while we are modeling gross margin -150bps (in line with guidance) we believe there is an opportunity for UA to do better as air freight is a tailwind and we do not anticipate liquidation pressures to exceed -30bps. With the options market implying a ~9% move, the fact is that 1Q16 should be another data point supporting our "oncein-a-generation company" thesis that has multiple growth levers available to it, including door/channel/category expansion.

For an analyst ratings summary and ratings history on Under Armour click here. For more ratings news on Under Armour click here.

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