Citi Downgrades Urban Outfitters, Inc. (URBN) to Neutral, 'Risk/Reward Looks More Balanced'

Citi analyst Paul Lejuez downgraded Urban Outfitters, Inc. (NASDAQ: URBN) from Buy to Neutral with a price target of $40.00 (from $36.00).

The analyst comments "

We are downgrading shares from Buy to Neutral. While we anticipate a 2Q EPS beat (AMC 8/22) vs consensus driven by stronger sales/GM and above-consensus 3Q guidance, we believe market expectations are high and the risk/reward is more balanced at current levels. We expect Anthro/FP will continue to show comp strength this year and that UO will improve sequentially in 2H. However, we believe the UO brand will be slower to turn around given fashion inconsistency (resulting in lower customer loyalty) and a tougher competitive landscape, ultimately limiting possible upside to EPS beyond what is already anticipated by the market. We note that a strong 2Q EPS and above-consensus 3Q guide may drive shares higher near-term, but possible upside beyond our $40 TP is more difficult to contemplate without a meaningful turn at UO (and historically, $40 is where URBN stock tops out)."

For an analyst ratings summary and ratings history on Urban Outfitters, Inc. click here. For more ratings news on Urban Outfitters, Inc. click here.

Shares of Urban Outfitters, Inc. closed at $36.41 yesterday.

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