Under Armour Inc (NYSE:UA) faces a tough test of investor confidence as UBS cuts its price target by 11% to $8, citing bearish sentiment, falling US website traffic and slowing growth in China, despite expecting quarterly earnings to broadly meet forecasts.
UBS expects Under Armour's second-quarter 2027 earnings per share to be broadly in line with expectations, supported by tariff benefits and cost cuts, allowing the company to maintain its full-year forecast of $0.08 to $0.12 a share.
The analyst described sentiment towards Under Armour as bearish, with short interest at 38%, among the highest in its peer group.
The shares have fallen 35.5% in three months, while the S&P 500 rose 4.1%.
Options markets are pricing in a potential 9.5% share-price move in either direction after the results, compared with a historical average of 10.7%, while UBS expects a smaller move.
UBS expects investors to look for in-line second-quarter earnings, unchanged full-year guidance and third-quarter earnings guidance of $0.01 to $0.03 a share.
Visits to Under Armour's US website fell 13% year on year in the second quarter, compared with growth of 23% in the first quarter.
Under Armour's gross merchandise volume in China grew at a high single-digit rate in the second quarter, slowing from 30% in the previous quarter, while Deckers Outdoor's recent results pointed to pressure on US athletic-wear demand.
UBS cut its price target by 11% to $8 after lowering its financial year 2029 earnings estimate to $0.60 a share from $0.65, valuing the shares at about 14 times forecast earnings.
The banker said its $8 price target values Under Armour in line with peers on price-to-earnings, price-to-sales and free-cash-flow yield.
It expects the product pipeline to deliver stronger revenue growth than the market anticipates once macroeconomic headwinds ease.
