Under Armour (NYSE: UA) closed at $33.75 Tuesday.

UA is hosting an investor meeting on May 29.

UA June call option implied volatility is at 53, puts are at 64; above its 26-week average of 52 according to Track Data, suggesting larger price movement. UA puts volatility is higher than call volatility because UA is difficult to borrow.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Though Under Armour (NYSE: UA) has gained more than 38% over the past year with eye-popping growth, investors should avoid the stock for now.

Under Armor's stock price may be poised to fall because of the company's patent liability and unmanageable product diversification. The company's 66 earnings multiple is three-times higher than its competition. Although the company is certainly not "average" with its growth statistics and very profitable businesses, the valuation is still ridiculous. Analysts expect the company's growth to slow to only 24% per year for the next five years, down from 44% per year for the last five years. Analysts, though, have failed to take into account increasing amounts of price cuts, which will also hurt 2008 earnings.

While Under Armour can claim nearly 75% market share in its primary market, this figure is likely going to be in steady decline for the next couple years because the company's products aren't protected by patents. As a result, competitors like Nike (NYSE: NKE) and Adidas have (and will continue to) hurt Under Armour's market position and pricing power. For most people (excluding the very wealthy) lowest price wins, especially when shopping for something as fungible as a performance t-shirt. This is going to force Under Armour to cut its prices and its margins and its status as a premium brand

MOST NOTEWORTHY: Time Warner Cable , Solera Holdings (SLH) and BioDel (BIOD) filled this morning's initiation list:

• Wachovia is positive on Time Warner Cable's (NYSE: TWC) competitive position, growth opportunities and valuation, starting shares off with an Outperform rating...

• Solera (NYSE: SLH) was initiated at Deutsche Bank and Citigroup with a Hold rating; Goldman started Solera with a Buy rating and JP Morgan initiated shares with an Overweight rating...

• BioDel (NASDAQ: BIOD) was initiated at Banc of America with a Buy rating, as the company's proprietary technology Viadel enables faster uptake of insulin that more closely mimic's the body's natural first phase insulin response. Leerink started shares with an Outperform and Morgan Stanley initiated shares with an Overweight rating...

OTHER INITIATIONS:

• UBS started Under Armour (NYSE: UA) with a Buy rating.

• Pinnacle Gas Resources (NASDAQ: PINN) was initiated with a Sector Perform rating at RBC Capital.

• FTI Consulting (NYSE: FCN) was initiated with a Buy rating at Stifel.

• UBS initiated Tyco International (NYSE: TYC) with a Buy rating.

• A.S.V. Inc (NASDAQ: ASVI) was initiated with a Buy rating at Oppenheimer.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Baltimore's Under Armour Inc. (NYSE: UA) is opening up its first retail location soon in the spirit of the company's brash, emotional and engaging marketing. In other words, stepping foot into an Under Armour store will make customers feel like they are in one of the company's engaging and sweat-strewn television commercials. That's just fine with Under Armour CEO Kevin Plank.

Although I'm wary on standalone retail locations for single brands (Apple being the lone exception), this one will probably work. The key is to engage the customer in emotional fashion and connect with why they are there in the first place. Did you notice there is a difference between walking into an Apple store and a CompUSA? Sure, one is a single brand and the other is a retailer with hundreds of brands. Is the experience the same? Not at all.

Under Armour's slick and well-produced commercials (a-la Gatorade's neon-sweat commercials) appeal to the male testosterone junkie better than most, and recreating that experience upon entering and browsing a retail location will score major points with the demographic that shops for sports apparel at an Under Armour store. Plank says it all here: "What I don't think the world needs is a slightly better athletic retail store ... it's our job to redefine the paradigm of what the consumer and the athlete are looking for." There you have it. Me-too athletic retail strategies are so 1990, eh?

MOST NOTEWORTHY: Alcoa Inc (AA), Marvell Technology Group Ltd (MRVL) Under Armour, Inc (UA), Las Vegas Sands Corp (LVS) and QLogic Corp (QLGC) topped today's list of noteworthy upgrades:

• RBC Capital upgraded Alcoa Inc (NYSE: AA) to Sector Perform from Underperform following the bid by Alcan Inc (NYSE: AL).

• Marvell Technology Group Ltd (NASDAQ MRVL) was upgraded to buy from Neutral with a $23 target at Oppenheimer based on valuation and the improvements made to HDD PC/Desktop.

• Morgan Stanley raised shares of Under Armor Inc (NYSE: UA) to Equal Weight from Underweight with a $47 target, based on valuation and long-term growth.

• Stifel upgraded shares of Las Vegas Sands (NYSE: LVS) to Buy from Hold with a $100 target citing valuation.

• Morgan Keegan upgraded shares of QLogic Corp (NASDAQ: QLGC) to Outperform from Market Perform on valuation and expectations for strong sequential growth to resume in 2H07.

OTHER UPGRADES:

• Friedman Billings upgraded shares of Sonic Corp (NASDAQ: SONC) to Outperform from Peer Perform.

• JP Morgan added Sara Lee Corp (NYSE: SLE) to its Focus List.

• CRT upgraded Forest Oil Corp (NYSE: FST) to Buy from Fair Value with a $45 target.

• Wachovia raised Eagle Rock Energy Partners, LP (NASDAQ: EROC) to Outperform from Market Perform.

• Gabeili upgraded New York-based Flushing Financial Corporation (NASDAQ: FFIC) to Buy from Hold.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Sunstone Hotel Investors, Inc (SHO), Under Armour, Inc (UA), Crocs, Inc (CROX) and Susquehanna Bancshares, Inc (SUSQ) were today's more noteworthy initiations:

• RBC Capital initiated Sunstone Hotel Investors (NYSE: SHO) with an Outperform rating.

• ThinkEquity started Under Armor Inc (NYSE: UA)and Crocs Inc (NASDAQ: CROX) with Accumulate ratings. The firm believes both companies can continue to grow market share, expand its product line and distribution and earn high ROIC.

• Stifel started Susquehanna Bancshares, Inc (NASDAQ: SUSQ) with a Sell rating...

OTHER INITIATIONS:

• Barrington started Continuecare Corp (NYSE: CNU) with an Outperform rating.

• Raymond James initiated JA Solar Holdings Co, Ltd (NASDAQ: JASO) with an Outperform rating.

• Thomas Wiesel started Inovio Biomedical Corp (NYSE: INO) with an Overweight rating and $8.

• Both BMO Capital and William Blair started FCStone Group, Inc (NASDAQ: FCSX) with a Market Perform rating; Banc of America started FCStone with a Neutral rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Under Armor Inc (NYSE: UA) and Cardinal Health Inc (NYSE: CAH) are today's most notable upgrades:

• Credit Suisse upgraded Under Armor Inc (NYSE: UA) to Outperform from Neutral with a $65 target and believes that the company is emerging as one of the premier global athletic brands.

• JMP Securities upgraded shares of Cardinal Health Inc (NYSE: CAH) to Outperform from Market Perform to reflect their expectation for accelerated earnings growth over the next three years.

OTHER UPGRADES:

• Friedman, Billings upgraded shares of Urban Outfitters Inc (NASDAQ: URBN) to Outperform from Market Perform to reflect positive momentum in URBN's core division, inventory control and easy upcoming comps.

• Stanford upgraded shares of Vonage Holdings (NYSE: VG) to Hold from Sell on valuation.

• Goldman Sachs upgraded the US Homebuilding Sector to Neutral from Sell saying the worst may be behind the group, but fundamentals remain troubling. The analyst said the next meaningful data will be from the Spring selling season, 6-8 weeks away.
• Goldman upgraded D.R. Horton Inc (NYSE: DHI), MDC Holdings Inc (NYSE: MDC) & Toll Brothers Inc (NYSE: TOL) to Buy from Neutral due to lower-risk at this point in the cycle. The Ryland Group Inc (NYSE: RYL) was upgraded to Neutral from Sell.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).