Under Armour Gets a Downgrade from Wells Fargo

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Shares of sportswear maker Under Armour slipped on Tuesday after Wells Fargo downgraded the company.

The bank cut its price target on the stock from $17 to $13 and gave it a “market underperform” rating. Traders were less than happy about the news as the stock fell 2%.

Wells Fargo analyst Tom Nikic wrote in a note that the apparel industry “has had a remarkable track record of success over the long term.” However, the industry “aappears poised to take a breather for now.”

Under Armour wasn’t the only company to get a lower estimate. The bank also lowered its estimate on Nike and Lulelemon and three other brands.

According to Nikic though, it’s Under Armour that faces the most risk of downside next to the other brands.

“The trend change away from performance (UAA’s forte) has left them ‘offsides’ from a fashion perspective,” Nikic wrote.
“The industry has had a remarkable track record of success over the long-term, but with consumers having filled their closets with athleticwear over the past 6-7 years, meaningful distribution issues (bankruptcies, store closures, etc.) and a current ‘lull’ in product innovation, the category appears poised to take a breather for now,” Nikic noted.

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