Telsey Reiterates Market Perform Rating on Urban Outfitters, Inc. (URBN)

Telsey analyst Dana Telsey reiterated a Market Perform rating and $44.00 price target on Urban Outfitters, Inc. (NASDAQ: URBN).

The analyst commented: "While URBN delivered a second consecutive quarter of better-than-expected sales, gross margin, and expense control, the comp miss disappointed, with underperformance at all three brands relative to market expectations. The UO brand remains a work in progress, significantly lagging on the topline once again. With the second quarter release, the UO brand unveiled its five-point turnaround plan that, in our view, will take significant time and work to see improvements across customer acquisition, product, communications, and investments. While the UO brand continues its turnaround journey, the FP and Anthro brands have been the pillars of strength. However, both FP and Anthro saw comps sequentially slow in Q2 with further deceleration anticipated in Q3. Furthermore, all three brands saw topline trends slow in July through mid-August as consumer spending patterns became more discerning given the still uncertain macro environment. As sales trends slowed, URBN planned for increased promotions to clear excess inventory in Q3 that is expected to weigh on gross margin, and, while the FY24 gross margin guide was reiterated, the outlook now suggests a significant improvement in Q4, which is an incremental risk in the current landscape, in our view. With ongoing uncertainty in the macro environment, shifting consumer spending patterns towards more value, heightened promotional activity, and slowing trends at FP and Anthro, we maintain our Market Perform rating and $44 price target. Our price target assumes a 10.8x multiple on our two-year forward EPS estimate of $4.08, as compared to the three-year average NTM multiple of 10.5x."

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 $37.62 yesterday.

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