Janney Says Urban Outfitters 'Getting Back On The Target,' Upgrades To Buy

In a report published Tuesday, Janney Capital Markets Adrienne Yih-Tennant upgraded shares of

to Buy from Neutral with a fair value estimate of $48 following the company's fourth quarter results. Yih-Tennant noted that Urban Outfitters main brand remains a "work in progress" as it is showing "considerable improvement" given it's a four percent comp in the recent quarter. Strength continued to be seen at the company's Free People given an 18 percent comp in the quarter and Anthropologie that posted record sales and profit. Elsewhere, the analyst stated that the DTC (direct to consumer) category continued to grow, with mobile penetration exceeding 50 percent for the first time and accounting for more than 25 percent of sales. Looking forward, the company projected it will achieve 100 basis points of year over year gross margin improvements in the coming fiscal year. However, the analyst estimates the company has a long-term gross margins recovery potential of over 1,000 basis points as the company continues a productivity review of the entire store to optimize its "four wall profitability."