Why Under Armour Stock Jumped 17% in January
What happened
Shares of Under Armour (NYSE: UAA)(NYSE: UA) leapt 17.4% last month, according to data from S&P Global Market Intelligence. Positive commentary from a respected research firm helped to fuel a rebound in the athletic apparel leader's beaten-down stock price.
So what
Under Armour's shares plunged in December, following the company's investor day presentation on Dec. 12. Investors were apparently disappointed by Under Armour's forecast of low-single-digit sales growth in its core North America segment over the next five years -- an admission that its traditional retail sales channels would remain under pressure from the relentless growth of e-commerce.
Yet in January, investors appeared to take a more favorable view of Under Armour's growth prospects. On Jan. 22, Goldman Sachs analyst Alexandra Walvis upgraded her rating on the stock to "conviction buy" from "neutral" and raised her price target to $28 per share. Walvis expects Under Armour's margin to improve as its sales, inventory management, and cost-cutting initiatives progress.
Now what
Under Armour's stock price has stayed flat so far in February. The company's class A shares (ticker UAA) currently trade for $20.75. Thus, Walvis' $28 price target represents potential gains of about 35% from today's prices.
Whether the stock begins to move toward that level will probably be determined by what Under Armour has to say when it reports its fourth-quarter financial results on Feb. 12. Investors may also want to tune in to the company's earnings call that same day or read a transcript of the call, which will be available here.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Under Armour (A Shares) and Under Armour (C Shares). The Motley Fool has a disclosure policy.