URBN Set to Snap Slump After Earnings Beat

There could be room for a short squeeze if URBN extends its rebound

Deputy Editor
Nov 20, 2018 at 11:42 AM
facebook twitter linkedin

Shares of Urban Outfitters, Inc. (NASDAQ:URBN) are higher today, bucking the broader retail trend into the red, after the company stepped into the earnings confessional last night. URBN's third-quarter earnings and revenue surpassed analysts' expectations across the board, with the stock now on pace to snap a seven-day losing streak, up 4% at $37.04, at last check.

However, several analysts have slashed their price targets, including D.A. Davidson, which cut its price target to $38 from $40. Telsey Advisory Group, meanwhile, trimmed its target to $42 from $44. Prior to earnings, coverage on URBN was cautious, with 14 of 21 analysts issuing a tepid "hold" or "strong sell" rating.

Since its Aug. 22 record high of $52.50, URBN has been in slow decline, with early November rebound attempts stalling at its 50-day and 200-day trendlines -- which recently made a "death cross." Yesterday, in fact, the stock touched its lowest point since mid-February.

A short squeeze could create additional tailwinds for the retailer. URBN's short interest of 13.83 million shares still represents close to 20% of the stock's available float. At the equity's average daily trading volume, it would take over six sessions for traders to repurchase their pessimistic positions.


Bernie's Best Stock Bets for Summer 2021



Special Offers from Schaeffer's Trading Partners