UAA - Under Armour has 75% upside with brand strength underrated - UBS

UBS defended its Buy rating on Under Armour ( NYSE: UAA ) with a strong contention that the market is not factoring in the pwoer of the UA brand.

The firm noted that its Evidence Lab's 2022 Global Athletic Survey showed Under Armour ( UAA ) os the 4th most top-of-mind athletic apparel brand in the world and has the 5th highest Net Promoter Score among its main athletic wear peers.

"Despite these solid characteristics, the stock's current market cap is just $2.8B, 15% below its May 2020 trough level and the lowest level seen since 2010. Our conversations with investors indicate they are focused on a likely very promotional Holiday season, risk of a 2023 global recession, unfavorable FX moves, and UAA's CEO transition."

While UBS analyst Jay Sole and team agree the near-term could be very challenging for UAA, they think the survey suggests UAA retains solid long-term potential and the current share price already reflects the near-term risks that have cut into investor sentiment.

UBS' price target of $12 is based on 15X the FY25 EPS estimate. The PT reps more than 75% upside potential for UAA from the current share price.

The Seeking Alpha Quant Rating on UAA is still at Hold, but the quant score is at its highest level since February.

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