Urban Outfitters Stock Sinks on Dismal Holiday Season, C-Suite Shakeup

Several analysts have already slashed their price targets, too

Deputy Editor
Jan 13, 2021 at 11:12 AM
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The shares of Urban Outfitters, Inc. (NASDAQ:URBN) are plunging, down 6.5% at $28.35 at last check, after a dismal holiday season and a c-suite shakeup disappointed investors. The apparel retailer's comparable holiday season sales fell 9%, with a double-digit rise in online sales hardly making up for the drop of in-person sales. On the management front, Trish Donnelly is reportedly departing as CEO of the Urban Outfitters Group unit, and Sheila Harrington, CEO of the company's Free People Group division, will assume Donnelly's position alongside her current responsibilities. As a result, no less than six analysts have cut their price targets on the equity. 

Yesterday's price action looked promising for URBN. The stock closed at its highest level since Nov. 23, briefly toppling recent pressure at the $28.70 region. While URBN is trading back below this level today, several potentially supportive trendlines, including the 10- and 100-day moving averages, could keep any additional losses in check. Plus, in the last nine months, the equity has tacked on 65%.

Circling back to the bear notes, the largest price-target cut was dished out by Barclays, which slashed its estimate to $34 from $37. Coming into today, the majority of analysts were hesitant toward the stock. Of the 19 in coverage, 14 called it a tepid "hold." Meanwhile, the 12 month consensus price-target of $31.06 is a 10.4% premium to current levels.

Bears are responding in turn, as evident by the activity occurring in today's options pits. Already, 4,657 puts have exchanged hands -- six times the intraday average and almost double the number of calls exchanged in the same time period. The most popular by far is the February 24 put, where new positions are being sold to open, followed by the January 2021 29.50-stike put.

For those looking to join these bears, options are relatively affordable right now. This is per the equity's Schaeffer's Volatility Index (SVI) of 55% which stands higher than just 12% of readings from the past 12 months, indicating option players are pricing in relatively low volatility expectations at the moment.


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