Janney Capital Upgrades Urban Outfitters, Inc. (URBN) to Buy; Back on Track

Janney Capital upgraded Urban Outfitters, Inc. (NASDAQ: URBN) from Neutral to Buy with a price target of $48.00 (from $37.00) following Q4 results, saying the company is getting back on target with opportunity for a gross margin recovery.

Analyst Adrienne Yih-Tennant cited: 1) regaining inventory control, 2) evidence of product turn at UO through positive reg-price comps, 3) buyback to support/accelerate EPS, & 4) what we estimate to be over 1000 bps of long-term GM recovery potential at UO. We do point out that Anthro is operating at historical peak metrics.

"We believe there is potential for material upside to EPS, particularly 2H15 and beyond," the analyst said. "While the stock is + >6% in the AM, we choose to upgrade based on the fundamental inflection & look for opportunistic entry points to accumulate."

The firm is raising FY15 EPS estimate to $2.06 from $1.92 (vs consensus of $1.95); FY16 EPS estimate to $2.40 from $2.20 (vs cons of $2.28).

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 $39.51 yesterday.

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