the stock has fallen about 3% this year, but has been steadily climbing since its spring lows, putting the stock not far below its all-time highs. But a return to the top might be too optimistic, warns Jefferies, who prefers his embattled rival
Recent research by analyst Randal Konik on online sneaker promotions shows that Nike (ticker: NKE) and
(ADDYY) have discounted products on
(FL) website. The percentage of Nike products in the top 60 sellers on sale rose year-over-year this month to 68%, a three-year high, he found. Adidas’ percentage also rose from a year earlier, to 62%, after a record high of 85% last month.
Meanwhile, Under Armor (UAA) saw its percentage drop to 22% this month, and Konik recommends “investors buy Under Armour, given its broad long-term growth track.” This contrasts with the added risk for Nike, which he thinks “investors probably don’t fully appreciate”.
The image is substantially the same on the
Dick Sporting Goods
(DKS), he wrote. While average selling prices for both companies’ products have improved in recent months, Under Armour’s declines haven’t been as severe as Nike’s. Under Armor’s relative price outperformance in the last quarter, along with declining sales at Foot Locker, lead him to believe that “the company’s footwear could be an area of strength this coming quarter. “, when the company will report at the end of the month.
Konik has a Hold rating on Nike and a Buy rating on Under Armour. The latter could benefit from good news when it reports its earnings, as its shares have fallen nearly 50% this year. Under Armor was struggling to turn around even before the pandemic threw the retail sector into chaos.
While consumer focus on wellness during shutdowns could be a catalyst for the stock, it has faced other coronavirus-related headwinds, including the fact that live sports have been suspended. This has led Under Armor to lay off workers and some analysts are questioning its return, although others, like Konik, believe it has sold too far.
Write to Teresa Rivas at [email protected]