Wedbush Remains Sidelined on Urban Outfitters (URBN) as Margins Drive 4Q Upside
Wedbush reiterated a Neutral rating on Urban Outfitters, Inc. (NASDAQ: URBN), and raised the price target to $32.00 (from $23.00), following the company's 4Q earnings report. URBN reported 4Q upside on better than expected merchandise margins from the Urban division. CEO Hayne discussed the burgeoning silhouette shift in macro fashion as a potential opportunity to drive apparel spend, with tighter, shorter tops starting to sell well, paired with looser fit bottoms.
Analyst Morry Brown commented, "URBN reported 4Q upside on better than expected merchandise margins from the Urban division. Tight inventory control drove improved full-price selling at U.O., while non-apparel categories performed well across all divisions. Better margins indicate stabilization across the three divisions - with U.O. making significant strides in profitability, while Anthro and Free People hold in at near peak margin rates. The lone sticking point is a lack of meaningful comp improvement, as SSS should remain flattish in the near term. Lack of top-line momentum keeps us NEUTRAL."
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Shares of Urban Outfitters, Inc. closed at $28.16 yesterday.