01:25 PM EDT, 08/09/2024 (MT Newswires) -- Under Armour ( UAA ) is making good initial progress on turning its business around with its fiscal Q1 results that could lead to improved sentiment and drive multiple expansion, UBS Securities said in a note.

"We think UAA's transformation initiatives and prudent cost controls should drive a healthy EPS recovery post FY25," UBS analysts, including Jay Sole, said. They forecast a five-year EPS compound annual growth rate of roughly 17%.

The analysts also said its effort to restructure over the last four years has created a better base off which to grow by eliminating unhealthy, low-margin businesses and better segmenting the marketplace.

"The time to own weak-sentiment turnaround stocks is when signs of the turnaround begin and the second derivative in its growth rate is inflecting," they said. "Our view is the biggest multiple expansion happens at that time."

UBS maintained its buy rating and $11 price target on the stock.

Price: 7.74, Change: +0.32, Percent Change: +4.25