- Under Armour (NYSE:UA, NYSE:UAA) is down 9% after the company said CEO Patrik Frisk is stepping down
- Current COO Colin Browne will replace him
- Wall Street analysts think this is a bad sign for Under Armour stock
Under Armour (NYSE:UA, NYSE:UAA) stock is sinking 9% in early trading after the retailer announced that CEO Patrik Frisk had resigned. Frisk, who joined the company in 2020, will leave Under Armour on June 1. The company’s COO, Colin Browne, will become interim CEO on that date.
Hurt by supply chain issues, Under Armour earlier this month reported lower-than-expected earnings per share for the first quarter and provided full-year EPS guidance that came in below analysts’ average forecast.
Specifically, the firm reported a loss per share of 1 cent, while analysts were looking for EPS of 4 cents. Moreover, Under Armour provided 2022 EPS guidance of 63 cents to 68 cents, well below analysts’ average estimate of 78 cents at the time.
Barron’s, which was upbeat on Under Armour stock in April, noted that in Q1 the apparel maker “did show positive sales outside of Asia, with revenue up 4% in North America and 3% internationally.” However, the publication warned that the shares are likely to struggle in “the near term” because investors may feel more comfortable owning the shares of larger firms during the market’s current volatility.
Morgan Stanley Downgrades Under Armour Stock
Meanwhile, Morgan Stanley responded to Frisk’s resignation by downgrading Under Armour to “equal weight” from “overweight.” The firm believes that Frisk’s departure indicates that he lacks confidence in the company’s “turnaround plan.” Stating that its own confidence in the company has dropped, Morgan Stanley cut its price target on Under Armour stock to $11 from $14.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.