This commentary was originally sent to Growth Seeker subscribers at 11:06 on Dec. 22.
This morning, Bank of America Merrill Lynch (BAC) upgraded its view on Foot Locker (FL), and in the process issued some favorable comments on Growth Seeker portfolio holding Under Armour (UA).
Specifically, because of the strength of the recently released Stephen Curry sneaker and the Speedform running platform, Under Armour was called out as an emerging footwear brand at both the mall channel and at Foot Locker in particular.
Currently, Under Armour products are in 30%-40% of Foot Locker stores. Given the strength of UA's footwear performance this holiday season, we would not be surprised to see it rolled out at more Foot Locker stores in the coming quarters.
Per data published by SportScan, Under Armour's footwear is seeing strong sell-through in basketball (again, Stephen Curry) and running sneakers (Speedform), and we'd note this is the strongest footwear UA has had, heading into the holiday shopping season. To us, this confirms the lack of promotion and sales around UA's footwear that was noticed in Versace's most recent holiday mall walk.
As we mentioned yesterday in our weekly Roundup comments, after the market close tonight Under Armour competitor Nike (NKE) will report its quarterly results. We will have comments and insights following that release and subsequent earnings call.
At current levels, the shares offer a compelling long-term opportunity for newer subscribers. Our price target remains $120.
