URBN - Urban Outfitters falls as Citi downgrades shares
2023-08-14 09:17:11 ET
Urban Outfitters, Inc. ( NASDAQ: URBN ) fell 2.3% before the open on Monday after Citi downgraded shares.
The firm pushed URBN down to a Neutral rating from Buy as it sees market expectations being too high.
Citi expects the retailer will beat profit estimates when it reports earnings on August 22.
Anthropologie and Free People brands should continue to show strength this year, but “the UO brand will be slower to turn around given fashion inconsistency (resulting in lower customer loyalty) and a tougher competitive landscape, ultimately limiting possible upside to EPS beyond what is already anticipated by the market.”
“We note that a strong 2Q EPS and above-consensus 3Q guide may drive shares higher near-term, but possible upside beyond our $40 TP is more difficult to contemplate without a meaningful turn at UO (and historically, $40 is where URBN stock tops out),” Citi analysts led by Paul Lejuez wrote in an August 14 note.
Over the weekend, Seeking Alpha analyst LD Investment s gave the stock a Hold rating, saying that URBN’s profitability metrics lags behind rivals, and fashion and execution risks could jeopardize growth of its apparel rental brand Nuuly, which is still at very early stages.
“The risk-reward is not compelling at this point, so the stock could be viewed as a hold for investors willing to tolerate the risks,” the analyst wrote.
The stock has four Strong Buy ratings from Wall Street analysts, two Buys, seven Holds and one Strong Sells.
Shares of URBN are up 66% over the past 12 months and have risen 50% so far in 2023.
More on Urban Outfitters:
- Urban Outfitters: Nuuly A Promising Growth Driver But Risks Are Significant
- Urban Outfitters upped to Buy, Capri cut to Hold at Morgan Stanley
- Urban Outfitters: Sale Till Stocks Last, Reiterate Buy
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Urban Outfitters falls as Citi downgrades shares