UPDATE: Mizuho Securities Downgrades Urban Outfitters to Neutral, Lowers PT on Expectations of Soft 3Q and Weak 4Q Gross Margin Commentary

In a report published Friday, Mizuho Securities analyst Betty Chen downgraded the rating on

from Buy to Neutral, and lowered the price target from $36.00 to $30.00. In the report, Mizuho Securities noted, “We are downgrading URBN to Neutral as we look for soft 3Q results and disappointing 4Q margin commentary to reinforce a lack of sequential improvement. In particular, (1) continued product issues at UO, (2) signs of slowing momentum at Anthro against difficult compares, and (3) incremental promotions suggest gross margin declines and risk to consensus. Although URBN may rein in SG&A spending, investors will likely still be disappointed with the lack of product-led strength and inconsistency in the portfolio of brands. While sentiment is likely low following the preannouncement, shares appear fairly valued at 15x.” Urban Outfitters closed on Thursday at $31.65.