UBS Expects Under Armour 4Q26 Results to Clear Low Expectations Bar

Overview

This is a UBS 4Q26 earnings preview report for Under Armour Inc. The core thesis is that current market expectations and investor sentiment for UAA are already very low; as long as 4Q results roughly meet or slightly beat expectations and FY27 EPS guidance is better than feared, it could drive an improvement in stock sentiment. UBS maintains a Buy rating and a US$11 target price, believing the company is in a turnaround phase where brand equity, international growth, innovation, and cost efficiency will support EPS recovery over the coming years.

Core views

UBS views 4Q26 fundamental trends as relatively stable, forecasting 4Q26 revenue of US$1.183bn (+0.2% YoY) and adjusted EPS of US$0.00, ~2 cents above market consensus. The report expects FY27 EPS guidance of US$0.25-US$0.30 and revenue growth guidance of ~0%-2%, with the high-end scenario reflecting low single-digit revenue growth. Regionally, North America remains under pressure with 4Q revenue expected down -5.5% YoY to US$651mn; EMEA expected up +7.8% YoY to US$300mn; APAC expected up +6.1% YoY to US$175mn; LatAm expected up +19.2% YoY to US$54mn. UBS believes the market may be underestimating two points: first, UBS Evidence Lab data reflects improvements in US search interest, APAC and China online demand, European consumer spending, and web traffic; second, promotional activity moderated in 4Q, helping keep gross margins relatively more manageable.

Analysis framework

The report combines top-down industry and sentiment analysis, bottom-up financial modeling, UBS Evidence Lab alternative data, quantitative crowding scores, options implied volatility, short positioning, relative valuation, and DCF analysis. Alternative data covers Google Search, Similarweb traffic, Tmall and Taobao GMV, European transaction monitoring, US DTC pricing and discounts, and Instagram social media metrics to cross-validate demand, brand heat, and promotional intensity. Valuation primarily uses ~14x FY28E EPS, supported by DCF as a secondary check.

Methodology notes

• Valuation methodsP/E multiples analysis

  P/E Valuation

  UBS derives a US$11 target price based on ~14x FY28E EPS of US$0.75, noting that this target is broadly consistent with peers across P/E, P/Sales, and FCF yield metrics.

• Valuation methodsDCF analysis

  Discounted Cash Flow

  The report uses DCF as a secondary valuation method, where long-term revenue growth, EBIT margins, WACC, and terminal growth rates collectively support the ~US$11 valuation view.

• alternative_dataUBS Evidence Lab

  Alternative Data Validation

  UBS Evidence Lab validates changes in Under Armour's brand heat, regional demand, and promotional intensity through search, web traffic, e-commerce GMV, transaction monitoring, pricing, and social media data.

• positioningQuant Crowding Score

  Crowding Score

  The crowding score measures the concentration of long or short positions; UAA's score of -2 is below the Softlines average of +5.3, indicating negative market positioning.

• event_riskOptions implied move

  Options Implied Event Volatility

  The options market prices in a +/-9.3% stock price move for the earnings event, below the historical average of +/-11.0%, which UBS considers a reasonable assessment of event volatility.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Under Armour Inc (UAA.US)

  Core Coverage

  Strengths

  High global brand recognition; UBS Evidence Lab shows improving trends in US search, APAC web traffic, China GMV, and European spending; promotional intensity moderated in 4Q; cost savings and SG&A leverage support EPS recovery.

  Weaknesses

  North America wholesale and e-commerce remain under pressure; gross margins impacted by tariffs, promotions, and macro costs; social media engagement and follower growth are relatively weak compared to some high-growth athletic brands.

  Comparison

  UAA's current FY2 P/E is above the industry average, but UBS believes the US$11 target price is comparable to peers on P/E, P/Sales, and FCF yield; crowding and short interest are significantly weaker than the Softlines average, reflecting more bearish sentiment and positioning.

  Risks

  FY27 guidance below expectations, 2H-weighted guidance viewed by the market as unachievable, rising oil and raw material costs, tariff pressures, persistent weakness in North America demand, and execution misses in innovation.

• Softlines/Apparel peer group

  Valuation & Positioning Benchmark

  Strengths

  Provides benchmarks for P/E, P/Sales, FCF yield, crowding, and short interest as a comparable group.

  Weaknesses

  Significant structural differences among peers in brand positioning, regional mix, channel composition, and growth profiles limit direct comparisons.

  Comparison

  UAA crowding score of -2 is below the Softlines average of +5.3; short interest of ~24% is above the industry average of ~10%; current FY2 P/E of ~28x is above the industry average of ~15x.

  Risks

  If overall industry consumer demand weakens or athletic apparel valuations compress, UAA's recovery thesis could be offset by systemic risks.

• UAA options

  Earnings Event Risk Pricing Reference

  Strengths

  Options market implies earnings event volatility of ~+/-9.3%, below the historical average of +/-11.0%, providing an anchor for event risk expectations.

  Weaknesses

  Options skew is more volatile than peers, and recent UAA skew is below the industry average, indicating unstable pricing of directional risk.

  Comparison

  UAA historical average event volatility is higher than current options pricing, and short positioning is higher than peers; if results beat expectations, short-term stock price reaction could be amplified.

  Risks

  If the company provides conservative guidance or margin pressure exceeds expectations, event volatility could materialize to the downside.

Key data

• Rating & Target PriceBuy; US$11.0012-month target price; current price US$6.08 implies 80.9% expected upside.
• 4Q26 EPS EstimateUS$0.00UBS forecast is ~2 cents above consensus of -US$0.02.
• FY27 EPS Guidance ExpectationUS$0.25-US$0.30UBS believes this range will exceed low market expectations.
• 4Q26 Revenue EstimateUS$1.183bn+0.2% YoY, above consensus of US$1.166bn.
• 4Q26 Gross Margin Estimate44.4%Down ~230bps YoY; tariffs and promotions remain key headwinds.
• FY26 Revenue EstimateUS$4.978bn-3.6% YoY.
• FY28E EPSUS$0.75Base target price of US$11 based on ~14x FY28E EPS.
• US Web Traffic+3% y/yTotal US web visits grew YoY in 4Q26.
• APAC Web Traffic+24% y/yTotal key APAC web visits grew YoY in 4Q26.
• China Online GMV+70% y/yUBS Evidence Lab shows Tmall and Taobao 4Q26 average GMV turned strongly positive YoY; March was ~+91%.
• Crowding Score-2.0Below Softlines average of +5.3, indicating bearish investor positioning.
• Short Interest~24%Relatively high compared to Softlines peers.
• Options Implied Event Move+/-9.3%Below UAA historical average event move of +/-11.0%.
• Upside/Base/Downside ScenariosUS$15 / US$11 / US$3Corresponds to stock return scenarios of ~+147%, +81%, and -51% respectively.

Impact & implications

If 4Q26 results and FY27 guidance align with UBS forecasts, the most direct impact would be a repair of low expectations: the market had feared continued revenue declines, weak North America recovery, and tariff-driven margin compression, but the report suggests alternative data and company actions indicate trends may be improving. Given high short interest, negative crowding, and bearish investor sentiment, even mildly positive results or guidance could trigger sentiment and positioning repair. However, the report does not suggest risks have disappeared, but rather that the risk-reward is skewed to the upside, particularly given the current share price of ~US$6 versus a US$11 target.

Risks

• Rising oil, freight, and raw material costs could compress FY27 gross margins.
• Macro uncertainty and Middle East conflicts could lead to FY27 guidance below market expectations.
• If the FY27 outlook is heavily weighted to the second half, the market may question the achievability of guidance.
• US tariff impacts may continue to drag on gross margins, especially if the company lacks pricing power.
• Continued weakness in North America revenue and wholesale channels would undermine the turnaround narrative.
• Execution risks exist in regaining relevance in athletic apparel and scaling footwear innovation.
• Concentration with key retail partners creates risk if relationships are disrupted.
• The athletic apparel industry is subject to fashion cycles and intensifying competition; stronger brands like Nike, Lululemon, and On could squeeze market share.

What to watch

• 4Q26 earnings release and management FY27 guidance on May 12, 2026.
• Whether FY27 EPS guidance reaches US$0.25-US$0.30 and revenue growth guidance is 0%-2%.
• Whether North America revenue decline narrows and if wholesale and e-commerce channels show improvement.
• Whether 4Q26 gross margin approaches 44.4% and the actual impact of tariffs, promotions, and pricing.
• Whether strong improvements in China Tmall and Taobao GMV are sustainable rather than driven solely by a low base.
• Whether improved US search interest and web traffic convert into actual sales.
• Whether DTC discount factors and discount depth continue to decline, validating improved promotional discipline.
• Changes in short interest, crowding scores, and options implied volatility around the earnings event.