Under Armour, Inc. (NYSE:UA) stock is up about 24% since January 24, when the company reported better than expected revenue and earnings. The latest quarter marked the 23rd consecutive quarter of an increase of 20% or more in revenue. That’s a growth rate most companies can only dream of having…and UA stock has reflected that. In the last five years, UA stock is up about 430%.
With that kind of performance, it’s hard to imagine that UA stock can keep climbing. But here is one catalyst that could send UA stock even higher.
Two years ago, Under Armour signed basketball player Stephen Curry to a contract worth close to $4.0 million a year, after Nike Inc. (NYSE:NKE) failed to match the deal. The deal seems like a bargain now for Under Armour, and Nike is probably kicking itself, since Curry has emerged as one of the best players in the league. In fact, he’s being described as a once-in-a-generation talent.
This season, his Golden State Warriors started off with 24 straight wins. It’s said they may break the NBA all-time wins record of 72, held by the Chicago Bulls. The hype around Curry is reaching astronomical heights—and fans will see him wearing Under Armour shoes.
Curry’s signature line of shoes, launched almost a year ago today, is largely responsible for the rapid growth in Under Armour’s footwear sales. In the last quarter, UA’s footwear segment grew 95% over last year, from $86.0 million to $167.0 million.1
No one has done what Curry has for the NBA and Under Armour since Michael Jordan, whose “Air Jordan” shoes were (and still are) a massive hit for Nike. In 2014, Jordan-branded shoes accounted for $2.6 billion in sales for Nike.2
The potential of this deal for Under Armour is huge. Morgan Stanley analyst Jay Cole believes that Curry shoes will become “the world’s No. 2 athletic brand” based on the performance and popularity of the athlete.3 If Curry keeps up his play over the next few seasons, Cole also believes that Under Armour could be worth $28.2 billion.4 That’s about three-quarters more than its current valuation of $18.13 billion.
The Bottom Line on UA Stock
Stephen Curry isn’t the only opportunity for Under Armour to grow its business, but no doubt he will be huge for UA stock if he truly becomes this generation’s Michael Jordan. With rapid growth in the company’s “Connected Fitness” segment, and increasing international sales, things are looking good for UA stock.