Credit Suisse Sees Urban Outfitters As Positioned For 2H Recovery

In a report published Tuesday, Credit Suisse analyst Christian Buss reiterated an Outperform rating and $42.00 price target on

. In the report, Credit Suisse noted, “URBN reported soft 2Q14 results with challenges at the Urban Outfitters brand persisting through the quarter. While guidance implies continued pressure on comps and margins, URBN has lean inventory levels heading into 3Q (up 4% Y/Y) and is chasing product, which we believe positions the company for likely upside to guidance. "In spite of demand and product execution challenges at the Urban brand, we continue to believe that the company has a best-in-class approach to specialty apparel retail given: 1) Appropriate retail square footage; 2) Accelerated investments in eCommerce; and 3) Expansion into higher-growth non-apparel categories. We expect clean inventories and greater potential for full-price selling to likely lead to merchandise margin expansion and accelerated earnings power in 2H14. We reiterate our Outperform rating and maintain our target price of $42.” Urban Outfitters closed on Monday at $36.92.