Urban Outfitters (URBN) Requires Patience, Says Goldman Sachs
Goldman Sachs reiterated a Buy rating on Urban Outfitters, Inc. (NASDAQ: URBN) with a price target of $44.00. The stock declined after reporting in Q4 EPS and disappointing 2015 outlook.
Analyst Lindsay Drucker Mann of Goldman Sachs said, "We expect shares will trade off Tuesday, 3/11 as investors digest a lower FY15 EPS outlook and recalibrate for a longer stretch of weakness at UO. We are buyers on weakness as we see reasons for optimism that a turnaround may be only a couple quarters away."
"First, even considering UO's operational issues, the soft macro and adverse weather of the last few quarters has likely exacerbated the underlying business run rate. With weather and macro expected to improve across the year, there is a strong case for sequential acceleration at UO alongside. Second, while URBN has only just announced an internal reorganization plan at UO to investors, it has given increased focus to improving the product since the fall of last year, with greater attention from both Chairman, President & CEO Dick Hayne and Meg Hayne (President, Free People). Lastly, the key issues URBN has identified holding back UO – like stifled creativity and too much bureaucracy – were also highlighted by URBN as challenges for Anthro in FY12, ahead of its very successful turnaround. This gives us confidence that implementing a similar playbook for UO should yield results," added the analyst.
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 $37.51 yesterday, with a 52 week range of $35.00-$44.96.
Analyst Lindsay Drucker Mann of Goldman Sachs said, "We expect shares will trade off Tuesday, 3/11 as investors digest a lower FY15 EPS outlook and recalibrate for a longer stretch of weakness at UO. We are buyers on weakness as we see reasons for optimism that a turnaround may be only a couple quarters away."
"First, even considering UO's operational issues, the soft macro and adverse weather of the last few quarters has likely exacerbated the underlying business run rate. With weather and macro expected to improve across the year, there is a strong case for sequential acceleration at UO alongside. Second, while URBN has only just announced an internal reorganization plan at UO to investors, it has given increased focus to improving the product since the fall of last year, with greater attention from both Chairman, President & CEO Dick Hayne and Meg Hayne (President, Free People). Lastly, the key issues URBN has identified holding back UO – like stifled creativity and too much bureaucracy – were also highlighted by URBN as challenges for Anthro in FY12, ahead of its very successful turnaround. This gives us confidence that implementing a similar playbook for UO should yield results," added the analyst.
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 $37.51 yesterday, with a 52 week range of $35.00-$44.96.