Under Armour shares shot up 17 percent Thursday, tracking for their best day in nearly two years, after the company's fourth-quarter results helped allay fears that weakness across the apparel space would creep into its performance.
Following the report, CEO Kevin Plank addressed investor concerns that the nearly $4 billion brand is reaching maturity in North America, outlining a plan to expand its presence in women's and footwear, and at bricks-and-mortar.
Together, the results and Plank's comments helped Under Armour shares reverse many of the losses they suffered since the brand reported third-quarter results in October, sending its shares into positive territory for 2016.
Still, the stock remains well off its all-time high of $105 a share, trading closer to $80 late Thursday morning.
"The beat illuminates the long-term strength and future opportunities of the brand," said Sterne Agee CRT analyst Sam Poser, who has a $120 price target on the stock.
Over the past few months, investors grew concerned that Under Armour was beginning to lose some of its momentum in the U.S., as warm weather forced it to take markdowns on some of its apparel.
But growth outside of the clothing category — namely, the company's 95 percent revenue growth in footwear during the quarter — and overseas expansion helped mitigate the discounts. The company is also putting more emphasis on expanding its women's division, and outlined the potential to significantly expand its presence at branded and sporting goods stores.
Whereas Under Amour's "largest competitor in North America" has 24,000 points of distribution, it has just 11,000, Plank said.
"We are just getting started," he said.
The company will need those additional levers to continue driving growth. Comparisons will get decidedly tougher for Under Armour in 2016, after posting 23 straight quarters of more than 20 percent top-line growth.
The first quarter is expected to be particularly tricky. Management expects additional pressure to weigh on its margin during the first three months as it tries to clear through excess inventory. Still, the brand expects to generate net revenues of roughly $4.95 billion during the year, which would represent growth of 25 percent. That compares with a 28 percent increase in 2015, to $3.96 billion.
Despite this growth, Under Armour's sales remain a fraction of those at its larger competitors. In its most recent fiscal year, Nike's revenues grew 10 percent to $30.6 billion.
"In our view this is a point of strength, as it demonstrates that the company has significant headroom for future growth," said Hakon Helgesen, an analyst at Conlumino retail research firm.