When shares of Under Armour stock plummeted more than five percent on Monday, several media outlets were quick to blame the dip on Jordan Spieth’s Masters collapse. In reality, the two events are mostly unrelated.
As Fortune reported, “It would be easy to connect the two events: a big, rising star athlete runs into trouble, potentially hurting the brand equity of the athletic gear maker that sponsors him… But a loss isn’t what is weighing on the stock.”
Leave it to Michael White’s Financial Management class at the Golf Academy to provide a little perspective. White confirms Under Armour’s drop has more to do with Morgan Stanley analyst Jay Sole’s (who covers Under Armour) bearish report over the weekend and less to do with Spieth’s quadruple-bogey on the Par 3 12th Sunday.
No matter Under Armour’s stock price, Nike still has its hands full with the Baltimore-based sports apparel and shoe company. UA currently has the world’s most popular football players (Cam Newton and Tom Brady), basketball player (Steph Curry), baseball player (Bryce Harper) and golfer (Spieth) in its stable of sports stars and sent out the following tweet Monday in support of its grieving star:
“Jordan is a young man who will learn from this experience and there will be good that comes out of this for him” @jacknicklaus We agree.” – Under Armour Golf (@UAGolf)
Blame Morgan Stanley, Not Jordan Spieth, for Under Armour’s Stock Price
By Christopher Dinsmore
The Baltimore Sun
One might be forgiven for associating the swoon in Under Armour’s stock price Monday with golfer Jordan Spieth’s epic collapse Sunday at the Masters, but they’re not really related.
While Under Armour’s fortunes are tied somewhat to the world No. 1 golfer, who debuted a new line of golf shoes from the Baltimore sports apparel and shoe brand this spring, other news sent the company’s stock down more than 5 percent.
Morgan Stanley analyst Jay Sole, who follows Under Armour, reportedly issued a downbeat report this weekend that said he is worried about weakening demand for women’s apparel and running shoes and affirmed his “underweight” rating on the company’s stock.
He called Under Armour’s growth in running shoes “unsustainable” and, coupled with slowing sales to women, will result in an earnings miss in the near future.
“We think a large part of the issue is UA is fully penetrated in its traditional sporting goods channel and perhaps more importantly, the industry is experiencing a slowdown,” explained Sole, according to this report on Benzinga.
He set a price target of $32 a share for Under Armour, well below its Friday close of $43.57 each. As a result, its shares lurched downward Monday, falling $2.39 each to close at $41.15 a share.
Not quite a quadruple bogey meltdown, but remember Spieth still finished second just as Under Armour is solidifying its second place to Nike in the nation’s athletic apparel market with its ongoing growth.