Skip to main content

Market Overview

Urban Outfitters Valuation Overly Optimistic?

Urban Outfitters Valuation Overly Optimistic?

Analysts at Deutsche Bank turned bearish on Urban Outfitters, Inc. (NASDAQ: URBN) after the stock's 40-percent gain implies shares are now "stretched more than their skinny jeans." The firm's Tiffany Kanaga downgrades Urban Outfitters' stock rating from Hold to Sell with an unchanged $19 price target (see Kanaga's track record here).

The fashion retailer's stock has notably outperformed the broader retail index and the S&P 500 index since early August, which helped boost the stock's multiple 3.5 turns versus the Street's fiscal 2018 earnings per share estimate, Kanaga commented in her downgrade note. As such, the stock's multiple is sitting above its three-year average and "sharply defy the multi-year contraction trend."

Moreover, the fashion retailer's bull run has been driven by "optimism" that the company's gross profit margins and comps will remain strong, Kanaga continued. But heading into the release of September's same-store sales metrics and third quarter results, it is likely that the stock's multiple will contract back toward the analyst's 12x target as opposed to today's approximate 15.5x multiple on projected fiscal 2018 earnings per share.

Bottom line, bulls expectations are overblown especially when factoring in expectations for an unseasonable fall weather, disruption from the multiple hurricanes, worsening mall traffic trends, "choppiness" in fashion at the company's core Urban Outfitters brand and Anthropologie.

At time of publication, shares of Urban Outfitters were down 4.96 percent at $22.80.

Related Links:

Cramer: These 3 Retailers Don't Need To Worry About Amazon's Threat

L Brands: Will It Have An Urban Outfitters Or Dick's Quarter?
Image Credit: By BrokenSphere - Own work, CC BY 3.0, via Wikimedia Commons

Latest Ratings for URBN

Jan 2021JP MorganDowngradesNeutralUnderweight
Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Morgan StanleyMaintainsOverweight

View More Analyst Ratings for URBN
View the Latest Analyst Ratings


Related Articles (URBN)

View Comments and Join the Discussion!

Posted-In: Analyst Color Earnings News Guidance Short Ideas Downgrades Price Target Previews Best of Benzinga

Latest Ratings

FSRMorgan StanleyMaintains40.0
MEDDA DavidsonMaintains302.0
VICRBWS FinancialMaintains120.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at