Urban Outfitters, Inc. (URBN) Making Strides Under New Leadership: Oppenheimer


Urban Outfitters, Inc. (NASDAQ:URBN) stock shot up yesterday by 23% after the company shook off a string of 8 disappointing quarters with impressive second quarter earnings. The retailer had a total of $873 million in net sales down by 2% since last year, while netting 44 cents a share or $50 million. The numbers exceeded the Street, which had predicted total net sales of $862 million along with profits of only 37 cents per share- indicating Urban yielded a beat of roughly 1.3% and nearly 19%, respectively.

Based on this past quarter’s success, analyst Anna Andreeva of Oppenheimer positively notes how “things change quickly in retail,” subsequently hiking expectations for the third quarter, projecting $0.30 in EPS while also lifting her estimate for the year to $1.32.

The analyst notes a number of factors that have led URBN to make a turnaround, leaving her cautiously optimistic: “After multiple quarters of comp disappointments (8 quarters of flat-to-negative comps at Anthro, 2nd consecutive quarter of negative UO comps), and while early and could very well change, URBN is seeing encouraging signs with women’s apparel at both Urban and Anthro (regular priced sales are up in the direct channel) as company is making strides with speed to market under new leadership. Wholesale/international expansion also taking hold with Free People’s launch on T-mall above expectations and Anthro home beginning to ship to John Lewis in 3Q17.”

Glancing ahead to the third quarter, Andreeva looks at the improvement in menswear among other categories, writing: “August last year was URBN’s easiest compare, with September toughest month (strong Labor Day Weekend), and October decent. UO up against tougher compare as momentum and tight inventories led to lower markdowns (merchandise margins +220 bps) and positive full-price comps across all categories (first improvement in men’s in 2 years).”

The analyst maintains a Perform rating without designating a price target. (To watch Andreeva’s track record, click here)

TipRanks analytics demonstrate URBN as a Buy. Out of 12 analysts polled by TipRanks in the last 3 months, 4 are bullish, 2 bullish, while 6 are sidelined on Urban Outfitters stock. With an upside potential of 5%, the stock’s consensus target price stands at $20.91.

 

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