In late September, Urban Outfitters announced at its analyst day that its goal by 2020 was to double revenue. The question to ask is whether that is achievable, as sales growth is expected to be only about 8.4% in 2014 and then 10% in 2015. Also, Urban Outfitters issued an earnings warning on October 16 that fourth-quarter profits may be hurt by lower-than-expected sales. It also mentioned that the third-quarter gross profit margin may narrow at a rate that was more than in the first half of the year.
In mid-October, Urban Outfitters stock was down about 12% after the retailer lowered its forecast. So far it has been downgraded to Equal Weight from Overweight at Morgan Stanley and to Neutral by Goldman Sachs. At the same time, Nomura reiterated a Neutral rating and lowered the price target to $32 from $39.
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On the chart, Urban Outfitters’ moving averages seem to be irrelevant to where the stock has been trading on negative news and trends. Currently, the 50-day moving average is $34.14 and the 200-day moving average is $35.36, versus a share price above $31.
Shares of Urban Outfitters were up about 1% at $31.13 in Monday morning trading. The consensus analyst price target is $37.10, and the 52-week trading range is $29.11 to $40.67. The market cap is more than $4 billion.
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