Under Armour, Inc. (UA) shares rose more than 2% during Thursday's session after Piper Sandler upgraded the stock to Overweight with a $28 price target – a 49% premium to Wednesday's closing price.

Key Takeaways

  • Under Armour shares extended their rally on Thursday after Piper Sandler upgraded the stock and doubled its price target to $28 per share.
  • Piper Sandler believes that estimates are conservative and that Under Armour stock could outperform, but BTIG cautioned that the mask benefit is limited.
  • The stock moved deeper into overbought territory during Thursday's session, which could suggest consolidation over the coming sessions.

Piper Sandler analyst Erinn Murphy believes that Under Armour stock could extend its rally by another 25%, saying that management has left cushion in both sales and gross margin estimates for the second half of the year. Murphy believes that the stock remains one of the most "unloved" stocks in her coverage despite these potential upside catalysts ahead.

On the other hand, BTIG analyst Camilo Lyon cautioned that e-commerce growth has been decelerating and that the benefit from mask sales won't last. Lyon believes that most of the e-commerce growth came from masks – accounting for about 18 basis points of total e-commerce growth during the third and fourth quarters.

Chart showing the share price performance of Under Armour, Inc. (UA)

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From a technical standpoint, Under Armour stock extended its gains from earlier in the week during Thursday's session. The relative strength index (RSI) moved deeper into overbought territory with a reading of 77.25, but the moving average convergence divergence (MACD) accelerated its bullish trend. These indicators suggest that the stock could see some near-term consolidation, but the intermediate trend remains bullish.

Traders should watch for consolidation between prior highs and trendline resistance at around $19.60 and trendline support at around $18.45 over the coming sessions. If the stock breaks down from those levels, traders could see a move toward the 50-day moving average at $15.67. If the stock extends its breakout, traders could see a move toward fresh highs.

Tip

Consolidation in technical analysis refers to an asset oscillating between a well-defined pattern of trading levels. Consolidation is generally interpreted as market indecisiveness, which ends when the asset's price moves above or below the trading pattern.

The Bottom Line

Under Armour shares moved sharply higher during Thursday's session after Piper Sandler upgraded the stock to Overweight and doubled its price target to $28 per share. While the stock could see some near-term consolidation, the intermediate-term trend remains bullish.

The author holds no position in the stock(s) mentioned except through passively managed index funds.