Citi Research has downgraded its rating on Under Armour from “Neutral” to “Sell” (when an investment bank like Citi downgrades a stock to “Sell,” it is telling its clients, institutional investors, funds, managers, that it is advisable to sell that stock because it could decrease in value), indicating that the brand’s recovery path in the United States still presents several elements of uncertainty, despite quarterly results better than expected.
The decision comes after the company had reported third-quarter earnings above consensus and raised profit forecasts for fiscal year 2026, factors that had supported the stock in the market.
According to analyst Paul Lejuez, the North American market, central for Under Armour, remains weak. In particular:
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- Traffic in the direct-to-consumer channel (online sales and mono-brand stores) is still limited.
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- Promotions have increased and have negatively impacted margins.
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- More marketing investments will be needed to strengthen the brand’s positioning.
Citi also emphasizes that competition in the United States is very intense, with brands like Nike, adidas, HOKA, On, and Salomon striving to gain market share. Even major retailers like Dick’s Sporting Goods and JD Sports may wait for stronger signals before increasing orders.
Europe also slows down
Another element of caution concerns the EMEA region (Europe, Middle East, and Africa), where growth at constant exchange rates slowed to 2% in the third quarter, due to a less favorable macroeconomic environment, especially in the United Kingdom.
For fiscal year 2027, Citi expects growth of 1.5% in the region, below market expectations. Under Armour has updated its 2026 profit guidance, now expected to be between 10 and 11 cents per share, compared to the previous 3-5 cents. However, a decline in annual revenues of around 4% is still confirmed. Despite the recent rise in the stock after quarterly earnings, Citi maintains a target price of $6.20 and believes that the risk/reward profile remains downward in the short term.
