Urban Outfitters Still A Best Of Breed Retailer, Says Brean

Brean Capital’s Liz Pierce reiterated a Buy rating on Urban Outfitters, Inc. URBN, while raising the price target from $32 to $35.

Q4 Beat

The company reported better than expected results for Q4, with the EPS beating the estimate and the consensus, driven better than anticipation gross margin expansion and lower share count.

“Although not the results we had originally expected, URBN’s year ended better than we expected and even though store comps remain in negative territory, we believe there are several encouraging signs in terms of top-line and bottom-line growth,” Pierce pointed out.

The analyst also mentioned that the full price sales and margin expansion at UO, along with the traction at Anthro were encouraging. In combination with the lean inventory levels, these should help drive additional margin expansion.

Best Of Breed

Pierce continues to believe that “with its 3 unique brands, considerable top-line growth potential, a strong balance sheet and its omni-channel focus, URBN remains a Best of Breed retailer.”

In addition, management reaffirmed that there still were significant growth opportunities for Urban Outfitters going forward, across geographies, channels and categories.

Pierce expressed optimism that “URBN’s goal of getting more share of wallet by expanding into home, beauty, intimates, active, shoes, wedding and outdoor living will continue to have a positive impact on the top line.”