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Shares of Under Armour (UA, UAA) are trading lower on Thursday after the company announced a shakeup in leadership: founder Kevin Plank will step into CEO Stephanie Linnartz's role come April. In response, an analyst from Williams Trading has downgraded the stock from Buy to Hold, lowering the price target from $11 to $8 per share.
Williams Trading Senior Equity Analyst Sam Poser, who is behind the downgrade, joins Yahoo Finance to discuss his call and contextualize the
Poser signals Plank's focus should be on strengthening the brand and not forcing top-line growth. He adds that Linnartz, the present CEO, had little time to effect her own changes: Linnartz's strategy "looked like it was working. I don't think it was given a chance. I can have a lot of guesses as to what I think happened, but unfortunately, for the timing of this, they're going into the quiet period next week, so we won't hear from Kevin until the beginning of May, which I think leaves everybody — that's why I downgraded it, not because it's necessarily bad, but based on what we know from the past...it sort of left us in a Never-never Land just trying to get more information, and it's hard to think they were pleased with what was going on if this change was made. Like I wrote in my note, it's a wait-and-see kind of thing.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
[MUSIC PLAYING]
JULIE HYMAN: Time now for Call of the Day. Under Armour shares are sliding after the company's founder and former CEO Kevin Plank said he's returning to the c-suite. Stephanie Linnartz is stepping down after less than a year in the role. The change as our next guest downgrading the stock to hold from buy. Let's bring in Sam Poser, Williams Trading senior equity analyst.
Hey, Sam. It's great to see you. So this was a surprise I think we can all safely say to most observers maybe even to those inside of the company. Why is it not being seen as a positive in the market that Plank is coming back?
SAM POSER: I think we all have memories of how Kevin ran the business really between, I think, like 2015 and 2019. It was prior to COVID. It was when "Sports Chalet" and "Sports Authority" went out of business. And rather than pulling back, he wanted to keep driving top line sales and opened up distribution with product that was supposed to go to "Sports Authority" and "Sports Chalet" into Kohl's.
And then that product tripped on the product that was at Dick's and Hibbett and a few other retailers. And then the same items started being sold at different price points and so on. So it was a lot of trying to drive top line at the expense of brand. And so we're not really sure what happened and why she's leaving. Because as I wrote in my note, I think that she was setting the table for some very good stuff over the long term.