Brean Capital Says 'No Need to Overreact' Following Urban Outfitters (URBN) EPS Miss
Brean Capital reiterates a Buy rating and $46.00 price target on Urban Outfitters, Inc. (NASDAQ: URBN) following Q1 results. URBN reported Q1 earnings of $0.25, missing Brean Capital's/Street estimates by 3c and 5c respectively. Analyst Liz Pierce said that this was largely due to lower sales, which is consistent to what has been heard in retail earnings thus far. Pierce says, "Buy on weakness".
Pierce commented on URBN, saying, "While URBN missed both our/Street estimate, we do not believe this is a sign of more bad news on the horizon. In fact, we believe Anthro’s issues are addressable and that UO is still in the early stages of its turnaround. That said, we are lowering our forward estimates due to additional revenue and margin pressure at Anthro. Nonetheless, we continue to see considerable margin expansion from product initiatives at UO and Anthro and from increased operating efficiencies such as a more optimized inventory position. Finally, the 21.9 million shares remaining on the combined share repurchase authorization provide tremendous support for the stock. Accordingly, we reiterate our Buy rating and $46 TP, which is based on a multiple of 24x our FY16 EPS estimate of $1.88 and a 1.1x PEG ratio."
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Shares of Urban Outfitters, Inc. closed at $40.72 yesterday.