Urban Outfitters Stock is a "Buy" Says Citigroup

The analyst praised Urban Outfitters' risk-reward profile

Deputy Editor
Oct 22, 2021 at 10:45 AM
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Citigroup adjusted its coverage on Urban Outfitters, Inc. (NASDAQ:URBN) this morning, raising its rating to a "buy" from "neutral," but cutting its price target to $40 from $44. The analyst praised URBN's risk-reward profile, noting the stock's 25% drop following its earnings report last August. Urban Outfitters stock was last seen up 1.3% at $30.77.

Despite the stock's third-quarter pullback, URBN still sports an 18.7% year-to-date lead. The equity appears to have found support near the $29 region, and is back testing its footing at the 320-day moving average -- a trendline URBN has danced around since late September. 

Coming into today, the majority of the brokerage bunch were cautious. Of the 11 in coverage, four said "buy" or better, and seven said "hold." Meanwhile, the 12-month consensus price target of $43.07 is a 41.8% premium to last night's close. 

Options traders have been more bearish than usual. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), URBN sports a 10-day put/call volume ratio of 2.59, which stands higher than 92% of readings from the past year. This means options traders have been picking up long puts at a much quicker-than-usual clip. 

Options could be an ideal way to bet on Urban Outfitters stock's next move. The equity's Schaeffer's Volatility Index (SVI) of 42% stands higher than just 2% of readings from the last 12 months. This means options traders have been pricing in relatively low volatility expectations of late. 

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