KeyBanc Reiterates a 'Hold' on Urban Outfitters (URBN); Push for Growth Might Have Impacted Its Focus

May 17, 2011 8:14 AM EDT Send to a Friend
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Price: $32.48 --0%

Rating Summary:
    11 Buy, 24 Hold, 0 Sell

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KeyBanc reiterates a 'Hold' on Urban Outfitters, Inc. (NASDAQ: URBN).

KeyBanc analyst says, "As expected, Urban Outfitters posted a disappointing 1Q, but we remain wary that performance may remain lackluster for the foreseeable future. URBN posted 1Q11 EPS of $0.23, compared to KBCM estimate of $0.30 and pre-announcement consensus of $0.25. Management was upfront in articulating its lack of focus, and in some elements, overall engagement. The business, from both an inventory and leadership perspective, seems to be retrenching. We worry that the Company's zeal to drive growth (Leifsdottir, Europe, Terrain, among others) may have stretched it a bit too far. With continued near-term gross margin pressure from markdowns, and medium-term pressures from higher product costs, we remain wary. We are lowering our FY11 estimate from $1.76 to $1.51 primarily due to lower near-term top-line and margin expectations. We also lower our 2Q11 EPS from $0.45 to $0.34. We also introduce our FY12 estimate of $1.80."

For more ratings news on Urban Outfitters, Inc. click here and for the rating history of Urban Outfitters, Inc. click here.

Shares of Urban Outfitters, Inc. closed at $32.29 yesterday.


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