Analyst Note| David Swartz |
No-moat Under Armour’s results for the final quarter of 2020 were better than expected as direct-to-consumer revenue rose 11%, aided by a 25% jump in e-commerce and strong consumer demand for athletic apparel during the pandemic. Still, wholesale sales dropped 12%, reflecting the ongoing effects of the crisis on many traditional retailers. Under Armour recorded an adjusted EPS loss of $0.26 in 2020, but it guided to 2021 EPS of $0.12-$0.14 on about $4.8 billion in revenue, in line with our prior estimates. We expect to increase our $12.10 fair value estimate by a high-single-digit percentage but view the shares, up about 8% midday on the report, as overvalued.