NEW YORK Shares of sports apparel and shoe maker Under Armour Inc (UAA.N) could rise 30 percent and the company is likely to increase sales at a double-digit clip for years to come as it has several markets left to tap fully, Barron's said in a report on Sunday.
The recent deal with department store operator Kohl's Corp (KSS.N) to sell its products in more than 1,100 stores could mark the start of expanding sales to the athletically disinclined, a lucrative market for rivals Nike Inc (NKE.N) and Adidas AG ADGn.DE, according to the report.
Relative to those industry giants, Under Armour also has plenty of room to grow in overseas markets and footwear, Barron's said.
Under Armour's revenue increased at breakneck speed for more than six years, averaging a quarterly growth rate of 20 percent, as shoppers could not get enough of their Stephen Curry basketball gear and Bandit running shoes.
But shares of the retailer have sagged in recent months amid slowing sales in North America and excess inventories. [nL1N1FZ0S4] [nL4N1FM3Z6]
The stock will not regain its former multiple to sales anytime soon, but a rise to even a market multiple, against sales that come anywhere close to the $6.1 billion projected for 2018 would send the stock more than 30 percent higher in a year, the report said.
The risk for investors who buy Under Armour shares now is that the company muddles through a long stretch of weak results and discomforting signals from management, in which case the stock could sag to $15, Barron's said.
Shares of the company closed 1.5 percent lower at $19.78 on the New York Stock Exchange on Friday and have dropped nearly 32 percent so far this year.
(Reporting by Devika Krishna Kumar in New York; Editing by Peter Cooney)