Under Armour appears poised for a bounce-back as its turnaround plan remains on track despite a pullback for the stock, according to Morgan Stanley. Analyst Kimberly Greenberger upgraded Under Armour to overweight from equal weight, saying that the company was showing fundamental strength that should help the stock rebound from an 11% decline in January. "We see an [opportunity] for UAA to outperform peers in '22 on lower relative supply chain risk, stronger relative China performance, industry channel check momentum, & likely conservative '22 guidance & expectations," Greenberger wrote. Morgan Stanley raised its price target on Under Armour by $1 to $24 per share. That represents more than 25% upside from where the stock closed Tuesday. Shares rose 2.7% in premarket trading. Supply chain issues have hampered apparel and sporting goods companies during the pandemic, but Under Armour could see a quicker recovery on that front than some of its peers, Morgan Stanley said. "Apparel comprises ~65% of UAA's revenue compared to footwear-skewed peers at 30-40%. This is an advantage because the apparel industry is on track to benefit from normalized inventory levels more quickly than footwear," the note said. Under Armour has seen a positive sentiment shift among Wall Street analysts in recent weeks. The stock was also upgraded by BMO and Citi in January. — CNBC's Michael Bloom contributed to this report.
Under Armour shoes are seen inside of a store on November 03, 2021 in Houston, Texas.
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Under Armour appears poised for a bounce-back as its turnaround plan remains on track des