Baird Charges Beneath Armour And Planet Health As 2022 Prime Concepts


In a note on Tuesday, Baird Equity Research Analyst Jonathan Komp Under armor and Planet Fitness as his two top ideas for 2022 as investor sentiment is likely to focus on “visible cyclical earnings recovery prospects”. Baird downgraded Under Armor to “Outperform” Glutton world Far onend Columbia sportswear.

the Under armor The upgrade is tied to the traction gained through Under Armor’s transformation efforts aimed at improving full-price sales in North America, with an emphasis on direct-to-consumer (DTC) and e-commerce, as well as reinvestment in branding activities In 2021, Under Armor has the potential to double earnings per share over the next three to four years.

Komp wrote, “Although it took some time for these actions to lead to better branding fundamentals, we believe UA is now benefiting from improved consumer sentiment (based on internal brand metrics for engagement / consideration).”

The analyst noted that Kohl’s and Academy Sports had made positive comments on Under Armor’s progress on their most recent quarterly calls.

Factors supporting Under Armor’s positive earnings outlook include management’s steps to reduce discounts to 3 percent of sales, strategically exiting approximately 3,000 lower-margin doors in North America, and adopting a “more focused approach” to Product innovations and go-to-market strategies that have shown positive signs of premium running shoes.

Komp wrote: “Due to these developments and the increased emphasis on building the DTC / Digital business, we believe that UA is able to generate sustainable annual sales increases in the mid to high single digits in F2023E, which in turn should lead to significant growth drivers Leverage amid an improved cost base and a return to an operating margin in the low teens or higher. “

Baird kept his Under Armor price target at $ 32.

the Planet Fitness The upgrade reflects the fitness chain’s “strong short-term cyclical recovery potential” in part due to the expected healthy growth in the industry due to the pent-up demand, along with Planet Fitness’s increasing economies of scale for marketing and brand awareness, strong franchise development trends, and digitally managed customer acquisition and Engagement.

Komp went on to write that Omicron risks “appear limited at this point,” with foot traffic data, Google searches, and media comments from Planet Fitness CEO Chris Rondeaus being optimistic about traffic and logins from Give to gym members in connection with New Year’s resolutions.

Baird has a target price of $ 110 at Planet Fitness.

The downgrade of Columbia and Wolverine to “neutral” signals, according to Komp, a “somewhat more selective approach” to stock selection, which is aimed at upside margins.

on wolverine, Komp is “optimistic about the positioning of its brand portfolio” and calls for Merrell, despite product delays, growth in the mid-single-digit range in the third quarter, growth of over 60 percent in two years for Saucony in the third quarter and growth of over 50 percent in the third quarter the recently acquired Sweaty Betty. The analyst also cited the benefit of the company’s increased focus on driving direct and digital engagement under the leadership of Brendan Hoffman, the company’s former president who succeeded Blake Krueger as CEO in late 2021. Consumer trends and international expansion potential. However, given inflationary pressures, including increasing air freight in 2022, the visibility of earnings growth remains limited. Baird cut his price target on Wolverine from $ 45 to $ 33.

Komp wrote: “While we risk being overly conservative with our revised target assumptions, we think that without a higher revaluation of the sector, investors could show greater interest in other companies with greater visibility of the earnings recovery in 2022E.”

on ColumbiaThe positive points mentioned include the brand positioning of Columbia and Sorel as well as the forecast of the management, which was made in the analyst request for the third quarter for a sales growth in the year 2022 of at least the middle of the tens range, supported by the incoming orders in the spring, which at Rush ahead by more than 30 percent.

However, Komp assumes that the stock will be held back by a more limited view of earnings growth. He cited investor concerns about Columbia’s ability to maintain or expand operating margins “amid potential sources of reinvestment along with the need to maintain a strong value proposition that could result in effective pricing below inflation”.

Baird cut his price target on Columbia from $ 130 to $ 107.

Photos courtesy of Under Armor, Planet Fitness