Stifel Reiterates Buy On Urban Outfitters

In a report published Wednesday, Stifel analyst Richard E Jaffe maintained a Buy rating on

, with a price target of $50. Urban Outfitters' share price has declined since mid-May due to investor concerns related to the weakness at Anthropologie. "However, we believe Anthropologie's issues are relatively easy to remedy given that the merchandise weakness is primarily focused on one product category, dresses, and expect results to improve in late 2Q. We view the recent sell-off as a buying opportunity," analyst Richard E Jaffe mentioned. The lifestyle merchandising company's retail segment sales so far in the current quarter are trending up in mid single digits, in-line with the street's 2Q comp sales estimate. Comps at the company's Urban brand are estimated to be up in mid single digits, while comps at Anthropologie are estimated to be up 3-4 percent, aided by increased promotions and a shift in a catalog drop from April to May. "At Free People, we estimate comps are running in the mid-teens (vs. 17% in the 1Q) despite challenging comparisons as consumers continue to respond positively to the brand's compelling product offering and engaging shopping experience both in-store and online," Jaffe added. In the report Stifel noted, "We believe strength has continued at the Urban Outfitters brand driven by full-priced sales as customers are reacting positively to a more compelling merchandise assortment." Reduced promotions are driving margins at Urban Outfitters. The company is taking steps to improve its operations that are likely to yield meaningful results in 2H.