Under Arms Inc. UAA,
was updated to buy from a hold at Deutsche Bank, part of a clothing sector study that found that COVID-19 was forcing some retail and apparel companies to make necessary changes that will eventually grow a business.
Deutsche Bank raised its price target on Under Armor shares to $ 22 from $ 15.
Analysts are predicting a 40% rise to the fiscal level of Under Armor by 2023 fiscal with the help of trends in inventory and prices, among other things.
The athletic company is also getting a boost from partnerships with NBA superstar Steph Curry and Dwayne “The Rock” Johnson.
“While Under Armmor still lacks fashionable sportswear, revenue can accelerate to a one-digit annual growth rate (CAGR), in our view, driven by a supportive athletic background, international expansion, and a region of North America that will return to growth after four years of decline, ”wrote analysts led by Paul Trussell.
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Deutsche Bank notes that Under Armor stock has taken a hit even as other athletic companies have reaped benefits through the pandemic.
Armed shares are down 6.4% over the past year, but have picked up 35.7% over the past three months.
The SPDR S&P Retail ETF XRT,
it is up 60.5%, and the S&P 500 SPX index,
has gained 16.2% for this period.
Analysts credit Under Armmor’s restructuring that puts costs in line with the company’s revenue base. Under Armor announced a restructuring plan in February 2020 and continued with their restructuring plan while managing the impact of the coronavirus pandemic.
While COVID-19 has been painful for many parts of the apparel sector, Deutsche Bank says it has forced companies to make necessary changes to their businesses.
“Ultimately, our acceptance is that COVID has been a meaningful positive driver for the sales margin pathway as the pandemic has led to difficult decisions regarding organizational structure, real estate, and the pace of digital investments while also experiencing less competition (through bankruptcy and store closures) and the opportunity for incentive activity and reset investment rates, ”said analysts.
Retailers have been able to invest in digital form and switch to customer behavior, which leads to better margins, more profitable stores, and other benefits, even if sales are slower to gain. back.
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Deutsche Bank also updated Michael Kors’ parent, Capri Holdings Ltd. CPRI,
buy from grip; Dillard’s Inc. department store vendor. DDS,
updated to keep it from selling; and parent of Vans VF Corp. VFC,
updated to buy from grip.
Analysts raised their price target on Capri to $ 56 from $ 28. Dillard’s almost doubled, up $ 60 from $ 31. And VF Corp.’s price target went up. raised to $ 103 from $ 81.
“Closed sources, more direct user guidance, less reliance on department stores, aggressive cost savings, AUR [average unit retail] expansion, well-managed investments, rapid digital growth, and off-the-shelf watches are no longer features that add to our confidence in the Michael Kors brand, ”analysts said.
“At the same time, the successful distribution of belts, sneakers, and other fringe handbags / accessories with brand new global stores and Versace star star marketing campaigns could be one of the fastest growing luxury brands in 2021. ”
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Dillard’s has reduced the number of cleaning products.
And analysts say the construction of VF Corp. and ongoing tail raising in the external and active sectors leading margins and sales.
“Lean investments and warmer-than-normal weather may constrain upside down in the coming quarter, but we have more confidence in the long-term algorithm of double-digit growth at the bottom and mid-teens TSR [total shareholder return] with exciting product innovation and brand collaboration leading to an increase in demand with these businesses gradually coming through direct-to-consumption (accounting for nearly 50% of sales) and in particular e-commerce (approaching 20%), ”said Deutsche Bank.
In addition to the Supreme purchase, analysts note the excitement created by a collaboration between The North Face and Gucci this month, and the success of a collaboration between the Timberland brand and label Jimmy Choo at Capri.