Retail

What Analysts Are Saying About Urban Outfitters After Earnings

Chris Lange

Published: March 11, 2017 9:35 am

Last Updated: January 12, 2020 2:03 pm

Urban Outfitters Inc. (NASDAQ: URBN) released its most recent earnings report on Tuesday. Although the financial results just barely missing the estimates, shares fell and analysts capitulated. Some analysts are still holding on to the idea that Urban Outfitters could be a compelling growth story, but for the most part analysts cut their price targets after this muted report.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts said afterward.

The Urban retailer said that it had $0.55 in earnings per share (EPS) and $1.03 billion in revenue, versus consensus estimates from Thomson Reuters that called for $0.56 in EPS and revenue of $1.04 billion. The same period of last year reportedly had EPS of $0.61 and $1.01 billion in revenue.

Comparable Retail segment net sales were flat for the quarter. By brand, comparable Retail segment net sales increased 2.0% at Urban Outfitters and 1.2% at Free People, but they decreased 2.9% at the Anthropologie Group.

Merrill Lynch maintained a Buy rating with a $35 price target. The firm gave its investment rationale as follows:

Urban is one of the most appealing growth stories in specialty retail, in our opinion. Its three proven concepts each have significant room for substantial expansion and its product is differentiated and compelling. A recovery in sales productivity levels at key brands and improving operating margins provide significant near-term earnings growth potential. Longer-term, square footage growth and an increasing penetration of ecommerce sales should drive earnings higher.

While Wedbush lowered its price target to $26 from $28, the firm noted strong e-commerce goals, as no retailer can ignore the digitalization trends. That report said:

Long-term commentary remains focused on digital, which CEO Hayne expects to overtake store sales within three years. URBN continues to directly address the key secular challenges generated from shifting sales online, more so than nearly all retail peers. CEO Hayne believes digital sales will represent 50% of total sales at URBN within the next three years.

A few other analysts weighed in on the report as well:

• BMO cut its price target to $25 from $29.
• Deutsche Bank lowered its price target to $24 from $25.
• Goldman Sachs cut its price target by a dollar to $21.
• Jefferies has a Buy rating and cut its price target to $35 from $43.
• JPMorgan lowered its price target to $25 from $26.
• RBC lowered its price target from $29 to $24.
• SunTrust Robinson cut its price target to $32 from $34.
• Telsey Advisory Group lowered its price target to $28 from $31.
• UBS has a Neutral rating and lowered its price target to $25 from $27.
• William Blair downgraded it to Market Perform from Outperform.

Shares of Urban Outfitters closed Friday at $25.17, with a consensus analyst price target of $27.66 and a 52-week trading range of $22.87 to $40.80.