BB&T Capital On Urban Outfitters: 'Risks Overshadow Great Brands'

Paul Alexander of BB&T Capital Markets initiated coverage of Urban Outfitters, Inc. URBN on Thursday with a Hold rating with no assigned price target.

Alexander notes that Urban Outfitters has a portfolio of "compelling" brands which gives the company an advantage of its specialty retailers. However, current trends at the company's core Urban Outfitters brand and a potential slowdown at the Anthropologie or Free People brands negates the positive attributes.

Comp trends are "weak" at Urban Outfitters brand, according to Alexander. The analyst adds that a slowdown at its other brands could be a "negative for investor sentiment and earnings."

"We do not see enough signs of an imminent turnaround at Urban Outfitters, and we see other near-term risks," Alexander wrote. "Such a recovery at Urban will take time."

Finally, according to Alexander, a store and category expansion strategy could prove to be "costly, slow to materialize, and margin dilutive" especially when the company approaches a domestic saturation and international growth that also lags.