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Shares of Under Armour have jumped more than 10% in the past two days after the company gave an update on its restructuring plan.
The Baltimore-based company said the restructuring will cost more than previously anticipated, so it plans to cut another 3% of its global workforce to help offset the cost. The company also raised the lower end of its fiscal 2018 earnings forecast.
The stock popped 6% on Thursday as traders digested the news, but not everyone on the Street believes Under Armour can actually turn a corner.
Following the announcement Susquehanna analyst Sam Poser re-iterated his negative rating on the stock. "Sell the rally," he wrote in a note to clients on Thursday, because "underlying fundamentals have not improved." His $11 target implies a 45% downside, as of Thursday's close.
"This is a restructuring story. I don't think you're going to see any of the results this year," she said on Friday's "Halftime Report." "I think the announcement they made yesterday, in terms of increasing their restructuring program, the size of it...they're clearing the deck, to get all the bad out in 2018 so you have a much cleaner story in 2019."
Poser's bear thesis on the stock centers around stalling revenue growth due to poor inventory and supply chain management. "Topline growth remains well below the 22% CAGR [compound annual growth rate] over the past 5 years...there is little indication revenue growth can or will return to anywhere near the aforementioned growth rate...additionally, bloated inventory puts FY18 gross margin guidance at risk and poor distribution decisions continue to undermine the brand," he wrote.
But Link, a managing director at Nuveen, which has $970 billion in assets under management, believes the company has identified these issues and is successfully taking action.
"The story is you have new management. They're working together as a team, there's a lot of overhead, a lot of cost-cutting they can do, and I think they're getting better on the supply chain and getting products out more quickly, and that is going to manifest itself in 2019, not in 2018."
Under Armour bears also cite competition in the athleisure and retail space more broadly as reasons to stay away from this stock. Link notes that Under Armour will never be in the same league as Nike - which she also owns - but that with inventories coming down, supply chain refinement, an improving balance sheet, and better execution Under Armour is a compelling buy.
Finally, she notes that there's an upcoming catalyst for the stock. "They have a December 12 analyst day, where they will showcase all their new products."
Stephanie Link owns Under Armour and Nike.