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On Tuesday, UBS reiterated its Buy rating on shares of Under Armor (NYSE:), Inc. (NYSE:UAA), maintaining a price target of $12.00.
The company's positive stance on the sports apparel company is based on several factors, including ongoing self-help initiatives that are expected to propel Under Armor to mid-single-digit annual percentage sales growth and an EBIT margin near 10%. These initiatives are expected to contribute to upward revisions to the company's earnings per share (EPS).
Under Armour's recent leadership change, with Kevin Plank resuming the CEO role, has not altered UBS's prospects. The firm believes self-help efforts were already underway prior to outgoing CEO Stephanie Linnartz's brief tenure and will continue. While Linnartz's potential to accelerate change was recognized, she was not central to the initial investment thesis.
The company's increased conviction in the Buy rating is partly due to the possibility of the stock's price-to-earnings (P/E) ratio expanding if the company delivers EPS surprises. This optimism is tied to the perceived underlying strength of the Under Armor brand and the expected benefits of the company's strategic efforts.
Looking ahead, UBS expresses excitement about the return of Kevin Plank as CEO, suggesting his leadership can further enhance the stock's upside potential. The firm's comment reflects confidence in Under Armour's current strategies and leadership to deliver value to shareholders.
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