Under Armour ( NYSE: UAA ) stock gained in premarket trading as Stifel stepped from the sidelines on Monday.
Equity analyst Jim Duffy hiked his rating to Buy from Hold based upon inventory management, demand dynamics in sports apparel, and attractive valuation.
“Relative inventory management discipline leaves Under Armour with better margin certainty and in a better position to bring newness to market in CY23 and we expect systematic risk from an inventory glut of larger competitors clears by [the second half of 2023],” he told clients. “With tightening lead-times, we see tailwinds to cash flow in CY23 and believe net cash balances could be >25% of the current market cap.”
Duffy added that a sturdy balance sheet and the expectation of a CEO transition announcement in coming weeks add to the rationale for bullishness on the stock into the new year. Alongside the upgrade he raised his price target to $12 from a prior $9.
Shares rose 2.94% in premarket action on Monday.
Read more on recent trading trends for apparel and footwear stocks .
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Under Armour stock edges higher on Stifel upgrade