Under Armour Just Got an Upgrade from Goldman Sachs

Shares of Under Armour Inc. were seeing some gains on Tuesday after receiving an upgrade from Goldman Sachs.

The firm has raised its rating on the sport apparel company from “neutral” to “conviction buy.”

Goldman Sachs analyst Alexandra Walvis wrote in a note that she was “constructive on the environment for consumer spending for 2019, driven by personal tax reform benefits, energy market tailwinds, and a healthy labor market.”

“For Apparel & Accessories, we expect these tailwinds to buoy middle and lower income consumers, while the outlook for high end and tourist spending is more muted.”

She also noted, “We see the trend towards athletic and outdoor attire as enduring, while among retailers we expect continued migration of spending dollars out of the mall towards e-commerce and compelling off-mall formats.”

According to the analyst, “inflecting margins on the horizon as quality of sale initiatives take hold, with longer-term growth on the horizon from innovation, international and footwear.”

Under Armour is expecting revenue to return to low double-digit growth by 2023 with gross margins expected to increase between 275 and 300 basis points by that year. Revenue is expected to be flat domestically but in foreign markets is expected to see a 3% to 4% jump in 2019.

Disclaimer: We have no position in Under Armour Inc Class A (NYSE: UAA) and have not been compensated for this article.