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Dressed To Kill Or Going Out In Style? Analysts Mixed On Ailing Urban Outfitters' Q2 Beat

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Dressed To Kill Or Going Out In Style? Analysts Mixed On Ailing Urban Outfitters' Q2 Beat
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Is Urban Outfitters, Inc. (NASDAQ: URBN), once the epitome of hipster chic, in danger of falling completely out of fashion?

“Fade away or here to stay?” wondered MKM Partners analyst Roxanne Meyer, who rated the kitschy clothier a Sell with a price target of $16. Shares were trading at $20,80, up a fat 23.66 percent on the day because its losses were less than expected.

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Fickle Trends, Fickle Customers

The stock was soaring despite a poor quarter of comparable store sales, a 4.9-percent drop that nevertheless beat expectations. Revenues dropped 2 percent to $873 million, another beat.

It reported net income of $50 million, a 35-percent decline year over year.

Related Link: After A 20% Surge Post Q2 Earnings, Urban Outfitters Still Has Plenty Of Upside Ahead

“While we are encouraged by improved regular-priced apparel comps across channels and brands in July, and which turned positive in 1H August, we are hesitant to declare inflection,” Meyer wrote in a note. “Unfortunately, we've seen this movie before, as in 1Q, when comps decelerated unexpectedly in 2H May/early June.”

“That said, while we believe (Urban Outfitters brand) Anthropologie is still a work in progress, we are less negative and believe the brand is skewing closer to its DNA,” she added.

Baird Bit More Bullish

Baird analyst Mark R. Altschwager said the numbers were encouraging and rated the stock at Outperform while raising the price target a buck to $22.

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“Results were a welcomed surprise following a weak Q1 and downright scary midquarter update,” he said in a note. “Ongoing sector headwinds are undoubtedly intense in apparel retail — but with a lean store base, clean balance sheet, brand-level operational improvements underway (speed-to-market), somewhat better earnings visibility ... we like 12-month risk/reward.”

At time of publication, shares of Urban Outfitters were up 17.9 percent at $19.83.

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 Image Credit: By Thatslegit (Own work) [Public domain], via Wikimedia Commons

Latest Ratings for URBN

DateFirmActionFromTo
Nov 2017BMO CapitalMaintainsMarket PerformMarket Perform
Nov 2017JP MorganUpgradesNeutralOverweight
Nov 2017KeyBancMaintainsOverweight

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