Analysts Respond to Urban Outfitter's Earnings Beat, Resale Venture

Urban Outfitters will launch Nuuly Thrift, an online resale marketplace, in the fall

Deputy Editor
Aug 25, 2021 at 9:35 AM
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The shares of retailer Urban Outfitters, Inc. (NASDAQ:URBN) are off 4.3% at $38.98 this morning, following the firm's second-quarter earnings report. The company's profits of $1.28 per share easily beat Wall Street's forecasts, while its revenue also topped expectations. However, Urban Outfitters reported slowing in-store traffic, and single-digit negative retail store sales growth. Separately, the apparel name announced the launch of Nuuly Thrift -- an online resale marketplace -- in the fall. 

This morning's negative price action has done little to deter analysts. So far, no less than seven analysts have lifted their price targets. The highest comes from Barclays, which hiked its estimate to $53 from $49. 

Heading into today, the 12-month consensus price target sat at $43.19 -- a 10.9% premium to last night's close. The brokerage bunch is still generally cautious on URBN, with eight of the 13 in coverage calling the stock a "hold," compared to five "buy" or better ratings. 

Short sellers have been piling on ahead of the event. Short interest rose 25.2% in the most recent reporting period, putting these bears in control. The 5.36 million shares sold short make up 8.9% of the stock's available float, or nearly three days at its average daily pace of trading. 

Today's drop has URBN set to snap a five-day win streak that promised to put the security back within reach of its June 25 annual high of $42.10. The $40 level has proven mostly elusive for the retail concern, though -- snuffing out rallies since all the way back in 2018. There's a silver lining to URBN's technical setup, however, seeing as the stock sports a solid 59.1% year-to-date lead, with support in place at its 180-day moving average. 

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