Urban Outfitters Stock Surges to Record High on Earnings Beat

There is still plenty of room for more analyst upgrades

Managing Editor
Aug 22, 2018 at 9:46 AM
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Shares of Urban Outfitters, Inc. (NASDAQ:URBN) are soaring in early trading. The stock was last seen up 8.4% at $51.77, earlier tapping a record high of $52.29, after the company last night reported second-quarter earnings that blew past estimates thanks to strong online sales. In the earnings call, the company credited an increase in full-price sales and CEO Richard Hayne said he sees "further improvement in the back half of the year."

Analysts were quick to react to the quarterly beat, with no fewer than six brokerage firms hiking their price target on URBN. Most notably, both J. P. Morgan Securities and SunTrust Robinson set targets of $55, and RBC raised to $54 from $46. Sentiment is not so optimistic on the whole, however, as 13 of 18 firms covering URBN sport tepid "hold" or worse ratings -- leaving plenty of room for upgrades in the near future. 

Digging into options data, near-term traders have been leaning put-heavy. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 3.02, which ranks in the 92nd percentile of its annual range.

Meanwhile, there is plenty of potential for a short squeeze on Urban Outfitters stock, which had already added 145% in the past 12 months. The retailer's short interest rose 6.3% during the last two reporting periods, and now represents a lofty 15% of the total available float. At the security's average pace of trading, it would take two weeks to buy back these bearish bets.

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