Under Armour shares dropped 6% in premarket trading after Citi downgraded the stock to Sell from Neutral, citing mounting challenges to the company's North America turnaround. The sportswear maker faces intense competition, weak direct-to-consumer traffic, and increasing marketing needs despite posting stronger-than-expected third-quarter results last week.

Analyst Paul Lejuez highlighted a 140-basis-point headwind from promotions in North America, which pressured gross margins in the third quarter. The EMEA region previously considered a bright spot saw sales decelerate to just 2% in Q3, with macro pressures particularly affecting the UK market. Under Armour has projected fiscal 2027 as a stabilization year with flattish sales in North America.

Citi forecasts another year of negative free cash flow in fiscal 2026 and expects Under Armour to struggle growing EPS in fiscal 2027. While the bank raised its fiscal 2026 EPS estimate to $0.15 from $0.06, it maintained its 2027 forecast at $0.14, below the consensus $0.22. The $6.20 price target suggests further downside potential for a stock that has already gained 25% since the earnings release.