Under Armour: Canaccord Genuity braces for another reset lower as no stabilization is in sight
Canaccord sits at Sell, $8 tgt on UAA noting their cautious view on UAA as they believe 2018 will be another year in which the company will seek to stabilize its NA business. Thus far, they see little in the way of traction, which portends that initial 2018 guidance could dramatically disappoint. Firm is lowering their 2018 ests further below consensus and now call for $70.9M in EBIT and 5c in EPS vs. $137.7M/16c previously. Their negative stance is based on three main factors: (1) the long duration needed to engineer a turnaround of this magnitude, (2) product improvements likely not tangible until 2019, and (3) no macro benefits such as tax reform to boost earnings. At minimum, firm believes it could take UAA another 12-18 months to fully regain its footing and begin to grow profitably. As such, they expect 2018 guidance to come in well below street expectations. For 2018, they are projecting total revenue growth of 1.6% vs. +4.6% consensus (with NA -6.8% and intl +30%).