Under Armour Inc., the maker of sweat-wicking athletic apparel, fell the most in almost three weeks after forecasting sales that trailed some analysts’ estimates.
The shares slid 7.4 percent to $50.42 at the close in New York, marking the biggest one-day drop since April 4. Before the decline, Armour’s stock had almost doubled in the past year.
Under Armour today increased its sales forecast for this year to as much as $2.91 billion from an earlier projection of $2.87 billion. While analysts’ average estimate was $2.88 billion, some projections ranged as high as $2.97 billion.
The forecast was “conservative,” said Paul Swinand, an analyst for Morningstar Inc. in Chicago who projected sales of $2.94 billion.
The company has been on a roll, selling increasing quantities of sweat-absorbing undershirts and fleece hoodies in an athletic-gear market that’s dominated by larger companies including Nike Inc. and Adidas AG. Under Armour has boosted sales more than 20 percent for 16 straight quarters and it’s pushing overseas to continue that pace, including deals with soccer teams in Mexico, Chile and the U.K.
The rapid growth has increased what investors are willing to pay for the shares. Under Armour traded at about 73 times earnings yesterday, almost three times the 25 times earnings multiple for Nike. according to data compiled by Bloomberg.
“When you talk about priced to perfection, this is an understatement,” Swinand said of Under Armour. “Even though it’s a great company, how much do you pay for it?”
He recommended selling the shares, even before today’s report.