Under Armour (UA) Extends Rally After Analyst Upgrade

Under Armour, Inc. (UA) shares rose 2% during Wednesday's session after Argus upgraded the stock to Buy with a price target of $20.00 per share.

Argus analyst Josh Brownstein believes that demand for performance apparel, footwear, and accessories has been improving while Under Armour management has been keeping a close watch on costs. Brownstein believes that the company's current valuation of 10X FY 2022 earnings per share (EPS) is below the average of other apparel names in the analyst's coverage.

The move follows Wells Fargo's upgrade to Overweight and Gordon Haskett's speculation that activist investors could become involved in Under Armour stock.

From a technical standpoint, the stock broke out from reaction highs of around $14.25 and remains in a bullish price channel dating back to mid-September. The relative strength index (RSI) rose to overbought levels of 71.44, but the moving average convergence divergence (MACD) remains bullish. These indicators suggest that the stock could see some consolidation before resuming its intermediate-term trend higher.

Traders should watch for consolidation within the price channel with a high of around $15.00 and a low of around $13.00. If the stock breaks down, traders could see a move toward the 50-day moving average at $11.45 over the coming sessions. If the stock breaks out, traders could see a move to close the prior gap at around $18.00.

The Bottom Line

Under Armour shares moved higher during Wednesday's session after Argus upgraded the stock to Buy with a $20.00 price target. While analysts have been warming up to the stock, traders could see some near-term consolidation within the stock's price channel before it resumes its intermediate-term trend higher.

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