Sterne Agee Lowers Urban Outfitters Price Target

In a note out Wednesday, Sterne Agee lowered its price target on

from $32 to $30, with a Neutral rating on the shares. Sterne Agee analyst Ike Boruchow said that, "Despite a negative pre-announcement on 10/16, URBN still meaningfully missed Q3 EPS due to weaker than expected GM pressure. Margin erosion continues to be driven by the struggling Urban brand. Making matters worse, inventory at UO ended Q3 heavy, driving a weaker than expected Q4 GM guide." Boruchow is lowering estimates and his price target, remaining cautious given lack of recovery visibility. Bornchow further said, "We now project Q4/FY15/FY16 EPS of $0.53/$1.61/$1.86 (from $0.62/$1.78/$2.06). Our 12-month PT is lowered to $30 (from $32) and is based on 14x our FY17 EPS estimate of $2.13 (from $2.35).With inventories elevated and no visibility into a recovery of the UO brand, we see no immediate end to the downward revision cycle, and we would remain sidelined here despite ongoing strength at Anthro and FP." Shares of Urban Outfitters were slightly lower in pre-market trading at $28.75.