By Tonya Garcia

Under Armour stock jumped 17% in Tuesday trading after results

Under Armour Inc. reported third-quarter earnings and revenue that beat expectations and raised its outlook, but shares were still downgraded at CFRA with analysts raising concerns that positive results could soon turn sour.

"We believe the valuation is stretched no matter how you look at it compared to peers and that most of the growth has come from higher prices which could fall under pressure as savings rates fall and the consumer weakens," wrote CFRA analyst Zachary Warring.

CFRA lowered its stock rating to sell from hold and cut its price target by $5 to $20.

Under Armour's (UAA)(UAA) Chief Executive Patrik Frisk expressed confidence in the increasing strength of the brand and its ability to overcome any near-term headwinds on the Tuesday earnings call.

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"Compared to 2019, North American revenue was up 2% in the third quarter," said Frisk, according to a FactSet transcript.

"It is important however to revisit some key differences in these comparable periods, 2021 North America versus 2019, including a significant increase in our direct-to-consumer business, substantially lower off-price sales, reduced promotional and markdown activities, proactive supply constraints, and undifferentiated access."

Under Armour stock soared 17% after the results were announced.

But CFRA wasn't the only analyst group expressing wariness about the path ahead.

"The comparisons with the wider market do nothing to take away from the fact that Under Armour is trading well and that it has successfully recovered from the pandemic slump," wrote Neil Saunders, managing director at GlobalData.

"However, they signal the brand does not have as much traction as others in the market and that it has lost share to rivals. To be fair, this is a known issue that management is addressing but, in our view, it is one that will become more pressing as the market cools and growth becomes more reliant on taking trade from other players."

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Saunders says the company needs to improve its reputation with athletes in high-performance gear, the way Lululemon Athletica Inc. (LULU) has become a name in the yoga community, and focus on comfort for casual consumers, like those who shop at Dick's Sporting Goods Inc. (DKS)

"The final quarter will provide some breathing space as comparatives from 2020 are weak," Saunders said. "However, thereafter things will get tougher and Under Armour will need to pull out all the stops to generate growth."

BMO Capital Markets is more upbeat in its earnings assessment.

"We believe Under Armour remains one of the few that successfully raised its pricing power, rather than simply enjoyed higher prices on lower industry promotions," analysts led by Simeon Siegel wrote.

BMO rates Under Armour stock market perform with a $20 target.

Baird analysts say the raised guidance could still be conservative.

"Overall, the initial results appear consistent with the broader profit recovery," analysts said.

Baird rates Under Armour stock neutral with a $27 price target. Under Armour is a Baird "Fresh Pick."

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Wedbush also thinks the guidance is conservative, and rates the stock outperform with a $33 price target, up from $26.

"We continue to believe that Under Armour is in the early innings of a multi-year turnaround (aided by the long-term structural growth of the athletic industry), which will drive strong improvement in fundamentals and share price," analysts wrote in a note titled "The Only Things 'Under' About UAA Are Under-Appreciatedand Under-Valued."

Under Armour stock has advanced 49.5% for the year to date while the S&P 500 index is up 23.2% for the period.

-Tonya Garcia