Citi Reiterates Neutral Rating on Urban Outfitters, Inc. (URBN)
Citi analyst Paul Lejuez reiterated a Neutral rating and $44.00 price target on Urban Outfitters, Inc. (NASDAQ: URBN)
The analyst comments "1Q EPS $0.69 were a solid beat vs cons $0.54 driven by stronger comps (+5% vs cons +3.5%) and GM (+110bps vs cons +30bps). Despite the beat, mgmt issued below cons implied 2Q EPS guidance of ~$1.00 (cons $1.15) driven by weaker GM (-75bps vs cons +50bps) on an anticipated step-up in UO promos to clean up excess inventory. Mgmt maintained F24 implied guidance of ~$3.60, pointing to an improvement in 2H GM as they lap heavy UO markdowns LY. We note UO’s QTD comps have improved to -HSD (vs 1Q -14%), but the improvement is largely promotionally driven. Stepping back, 1Q was solid; however we continue to believe the UO turnaround will be a heavy lift and see some risk to 2H guidance based on a sales/margin trade-off at UO. With shares trading at an F23E EV/EBITDA multiple of ~6.5x, we believe the risk/reward is balanced at current levels."
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Shares of Urban Outfitters, Inc. closed at $41.32 yesterday.