Under Armour has improved since COVID-19, analysts say

Under Armour Inc. has used the tumultuous time during the COVID-19 epidemic to make long-term improvements to the business, BMO Capital Markets analysts say, causing an upgrade of the stock to outperform market perform.

BMO raised its price target by $2 to $25.

The analysts of BMO, Simeon Siegel, note improved gross margins, with more growth possible. After a period in which there was a growth-at-all-costs mind-set, the athletic company has found operational efficiencies. Under Armour UAA has been socking away cash, which could lead to stock repurchases and earnings per share growth.

We are upgrading Shares of Under Armour to Outperform because of the recent selloff that minimizes Under Armour's proactive use of a COVID-Cover to refashion its business for the future, improving pricing power through brand elevation and expense structure through close scrutiny of prior spending, according to BMO.

Under Armour's stock has fallen 7.7% over the past three months, but the stock has gained 4.7% over the past year.

The S&P 500 index SPX is up 2.4% over the past three months.

Under Armour stock was downgraded at Stifel in December, with analysts concerned about the potential for increased discounting.

Under Armour was at neutral on Tuesday at Seaport Research Partners, with analysts drawing a connection between brand health and sales growth, particularly in North America.

In recent quarters, Under Armour has achieved strong profit improvement, but North American sales have yet to get back to their CY 16 peak, according to analysts.

We are encouraged by Under Armour's progress but we have yet to see it translate into true brand heat. As a result of supply chain challenges, Under Armour expects FY 22 to get off to a slow start, slower than most of the other vendors we cover, which isn't a good optic. Boot Barn says preliminary earnings beat the Street.

Under Armour's analysis was part of a large report in which Seaport Research initiated the footwear and apparel category.

Boot Barn Holdings Inc. is a company that is affiliated with Under Armour. BOOT, Crocs Inc. CROX, Columbia Sportswear Co. COLM and Vans parent VF Corp.