Shares of Under Armour Inc. (UAA) continue to make comeback this year, gaining nearly 4% on Monday on an upbeat note from a team of analysts who indicate that investors are underestimating the athletic apparel and footwear maker's opportunities in international markets. Closing at $16.73, UAA reflects a 16% gain year-to-date (YTD) and a 11.9% decline over the most recent 12 months, compared to the S&P 500's about-flat run and 13.7% gain over the same respective periods. (See also: Moody's Sees a Profitable Under Armour in 2019.)

The Baltimore-based sneaker maker, which heads off against U.S. rival Nike Inc. (NKE), the world's largest athletic apparel company, and revived German competitor Adidas AG (ADDYY) has been met with criticism on the Street regarding its tarnished brand identity and its failure to keep up with its peers to meet evolving consumer preferences and navigate a shift to online shopping.

Deutsche Bank analyst Paul Trussell wrote a note to clients indicating while wholesale trends in North America continue to face pressure, weakness should be offset by a "rapidly growing" international business. The investment firm sees first-quarter and fiscal-year 2018 earnings as "attainable," on an "improve sell-through of new products and a commitment to cost reduction."  

An Analyst on the Sidelines

“We believe the opportunity to grow internationally on the top-line remains robust as Under Armour's peers in the athletic space continue to produce outsized growth. Many in our athletic coverage (Lululemon Athletica Inc. (LULU), Under Armour, and Nike) have called out international as a main component of growth, particularly driven by China,” wrote Deutsche Bank. 

That being said, Trussell still rates UAA at hold, indicating that valuation is "in the eye of the beholder" and his team has merely "moved to the sidelines." He expects UAA shares to fall 4.3% over 12 months from Monday close to reach $16, increasing his price target from $13. The Deutsche analyst foresees UAA to post a Q1 loss of $0.06 per share, a penny short of the consensus estimate, according to FactSet. Meanwhile, his full year 2019 estimate for earnings per shares (EPS) of $0.34 is above the Street's average forecast. 

The analyst noted that while UAA stock has limited downside, it is no bargain, and still faces risks such as "lost shelf space in U.S. sporting good stores, fierce brand competition for the consumer's attention and wallet, execution risk of strategy both domestically and internationally and perhaps most important the need to create product that is functional while also resonating with consumer from a fashion standpoint.” (See also: ‘Dismal Sales’ to Send Under Armour Crashing: CFRA.)