Brean Capital Reiterates Buy Leading up to Urban Outfitters (URBN) Q1 Results
Brean Capital reiterates a Buy rating and $46.00 price target on Urban Outfitters, Inc. (NASDAQ: URBN) leading up to Q1 results. URBN will will report its Q1 results following the close of market today.
Brean Capital analyst Liz Pierce commented on URBN, saying, "While we are raising our Q1 estimate, we are a bit more cautious about Q2 given concerns related to the West Coast port issues. Specifically, although URBN tends to air freight a lot of their product, we are concerned about an indirect impact to gross margin in Q2 as we expect sector-wide promotional activity to be aggressive as retailers work to clear out late arriving Spring product in time for the end of June deliveries of transitional BTS merchandise. Accordingly, we are lowering our Q2 estimate to $0.53 from $0.56 but shifting those earnings into the back half of the year. Thus, when combined with our higher Q1 estimates, our revised FY16 and FY17 EPS estimates are $2.02 and $2.45, up from $2.00 and $2.43 respectively. In fact, we believe our forward estimates could still be conservative as we see considerable margin expansion from current levels stemming from improved product at UO and from increased operating efficiencies such as a more optimized inventory position. Moreover, we believe all URBN brands have strong consumer attachment positioning each for market share gains. Accordingly, we reiterate our Buy rating and our $46 TP; our $46 TP is based on a multiple of 23x our FY16 EPS estimate of $2.02 and a 1.05x PEG ratio."
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Shares of Urban Outfitters, Inc. closed at $39.59 yesterday.