Looks like retailer Urban Outfitters (URBN) is slightly fashionable again…at least for today.
After sinking to a 52 week low on Feb. 4 and reporting a mixed fourth quarter on March 10, shares are advancing today after Morry Brown of Wedbush upgraded the price target to $46 from $44 in a note.
Brown’s increase came following a meeting with CFO Frank Conforti and Director of Investor Relations Oona McCullough, from which he emerged confident of a third-quarter turn. He writes:
1) We believe current challenges at Urban are not driven by secular trends in teen spending, but by poor product execution; 2) category expansion presents a meaningful growth opportunity in the coming years, one that is not available to most peers; and 3) fears of a potential slowdown at Anthropologie lack a catalyst and conflict both with current merchandise execution and quarter-to-date same-store sales results, which show ongoing strength at the division. Over the next three-to-six months, we expect sentiment to shift on these topics, likely driving increases in second half of 2014 estimates and valuation.
Brown also praised Urban for its category expansion opportunities, strength in e-commerce penetration and strong brands:
Beyond near-term execution and sentiment shifts, we continue to view Urban as the best-in-class specialty retailer, and one of the few that remain well positioned for longer-term growth
Shares of Urban Outfitters have gained 1.6% to $37.87 at 3:49 p.m., while Abercrombie & Fitch (ANF) has risen 0.3% to $37.24 and the Gap (GPS) has dropped 1.4% to $40.16.
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