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
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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.


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