Sales Surge, Earnings Beat Have Analysts Eyeing URBN

No less than nine brokerages raised their price targets after the report

Deputy Editor
May 26, 2021 at 9:22 AM
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The shares of Urban Outfitters, Inc. (NASDAQ:URBN) are in rally mode this morning, following the apparel company's strong first-quarter results. The firm reported profits of 54 cents per share on $927.42 million in revenue, with the former besting analysts' estimates and the latter coming right in line with expectations. URBN also reported better-than-expected sales for its first quarter, and a 10% increase in same-store sales, thanks to impressive e-commerce growth. 

The stock is up 11.6% at $39 in pre-market trading. It's been a choppy second quarter so far for URBN, which just gapped back below recent support at its 80-day moving average late last week. The equity is looking to clear this level once more in today's trading, though investors should keep an eye on the $39 level, as it's contained most of the equity's price action since late March. 

The earnings beat drew plenty of attention from the brokerage bunch, in fact, no less than nine analysts lifted their price targets, including J.P. Morgan Securities, which raised its price outlook to $47 rom $46, and upgraded the stock to "neutral" from "underweight." 

More bull notes could be a possibility, considering the tepid sentiment surrounding the stock coming into today. Of the 14 analysts covering Urban Outfitters stock, just five said "buy" or better, while nine called it a "hold" or worse. The 12-month consensus price target of $41.07, meanwhile, sits at a 5.6% premium to current levels. 

Short interest shot up ahead of URBN's earnings event, and an unwinding of some of this pessimism could also put some wind at the equity's back. More specifically, short interest rose 19.2% in the last two reporting periods, and the 4.91 million shares sold short now  make up a solid 8.2% of the stock's available float. It would take over three days to buy back these bearish bets at Urban stock's average daily pace of trading. 

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