Under Armour is getting slammed after its investor day disappoints
- Under Armour dropped 10% Wednesday after the company posted mediocre revenue guidance.
- The sporting-apparel maker said it sees annual revenue growth of 7% from 2020 to 2023, versus the 5% to 8% increase that Wall Street analysts surveyed by Bloomberg were expecting.
- An analyst lowered her price target, citing "skepticism of the timeline of UAA's turn-around narrative following today's Investor Day."
- Watch Under Armour trade live.
Under Armour shares dropped 10%, to $19.87 apiece, on Wednesday after the company posted a mediocre revenue guidance.
At Under Armour's first investor day since 2015, the sporting-apparel maker said it expects annual sales growth in North America to be in the low-single digits from 2020 to 2023. Combining the international market, the company's total top-line guidance implies 7% annual growth over that span. Wall Street was expecting an increase of 5% to 8%, according to Bloomberg.
The company also plans to source 7% of its products from China by 2023 - down from the current level of 18% - according to its investor day presentation. Meanwhile, the percentage of products sourced from the Americas is expected to drop from 20% to 17% by 2023.
Under Armour shares tumbled as much as 79% from their September 2015 peak through the middle of 2017 as the retailer struggled to get its inventory under control. This year, the company announced an ambitious restructuring plan that aimed to clear excess inventory, eliminate under-performing products, and cut more than 500 jobs.
After spending most of this year resetting its business, Under Armour reported better-than-expected earnings for the third quarter.
But Wednesday's investor day didn't provide much investor confidence over the long term, according to an analyst at CFRA Research.
"We trim our 2018 EPS estimate to $0.22 from $0.23 and 2019's to $0.32 from $0.33," said Camilla Yanushevsky, an equity analyst at CFRA Research.
"Our downgrade reflects our skepticism of the timeline of UAA's turn-around narrative following today's Investor Day. We remain concerned with UAA's ability to tighten inventories (down only 0.6% in Q3) without significant brand degradation from aggressive off-price selling."
Yanushevsky cut her price target by 25% to $15 - 24% above where shares are trading Wednesday.
Under Armour was up 31% this year.
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