The difficult year for Under Armour shareholders will improve due to a new sneaker launch, according to one Wall Street firm.
Jefferies reiterated its buy rating for the sports apparel company's shares, predicting Under Armour's latest Stephen Curry product will be a big hit.
"A phased launch, tighter allocations, fewer colorways and easy comps versus Curry 3 give us conviction that Curry 4 will be a resounding success," analyst Randal Konik wrote in a note to clients Tuesday. "Lastly, with competitor products aging, we believe Curry 4 will become the #1 sneaker in basketball this year which should also help Under Armour shares rebound."
Under Armour shares are underperforming the market this year. Its stock is down 44 percent year to date through Tuesday versus the S&P 500's 14 percent return.
The company lowered its guidance for the year in August and laid off 2 percent of its workforce.
Konik cited how the Curry 4 "Championship Pack" bundles are selling for 80 percent to 100 percent premiums on resale sites. In addition, the sneaker has been hashtagged on Instagram more than 5,000 times, according to the analyst.
"Our calls, store visits, social media analysis and review of StockX pricing of Curry 4 soft launches (official launch 10/27) points to very strong buzz in the market," he wrote.
The analyst reaffirmed his $28 price target for Under Armour shares, representing 72 percent upside to Tuesday's close.
"We believe current market cap (less than Lululemon Athletica today which makes no sense) does not reflect the large global TAM [total addressable market] and early stages of growth ahead for Under Armour," he wrote. "What matters is Under Armour is a brand with l-term staying power with the lowest [market] cap in over 5 years."