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On Thursday, Citi analyst Paul Lejuez increased the price target for Urban Outfitters, Inc. (NASDAQ: URBN), a $4.9 billion specialty retailer trading at an attractive P/E ratio of 14.9x, to $65 from the previous $59, while reiterating a Buy rating. Lejuez highlighted the company’s fourth-quarter earnings per share (EPS) of $1.04, which surpassed the consensus estimate of $0.93, attributing the beat to a stronger gross margin (GM) that was 200 basis points above the consensus forecast of a 100 basis point increase. InvestingPro data shows that 4 analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s outlook.
Urban Outfitters reported a 3.5% decline in comparable store sales (comps) for the fourth quarter, which was a notable improvement compared to the 9% decrease in the third quarter. The company’s first-quarter-to-date comps have been approximately flat, despite challenges from adverse weather, suggesting that a positive turnaround in comps could emerge as soon as the first quarter. This performance positions the company’s full-year 2025 guidance for flat to low-single-digit positive comps as potentially understated. With annual revenue of $5.4 billion and a healthy 34.2% gross margin, the company maintains a "GOOD" overall financial health score according to InvestingPro’s comprehensive analysis framework.
The analyst expressed confidence in the company’s ability to recover from significant markdown pressures in fiscal year 2025, considering management’s conservative gross margin guidance of a 50-100 basis point increase. Lejuez also praised the strong results delivered by Urban Outfitters’ other brands, Anthropologie (Anthro) and Free People (FP), which have benefited from effective execution and favorable fashion trends.
With all three core brands—Urban Outfitters, Anthropologie, and Free People—showing momentum, and the Nuuly brand posting impressive growth, Lejuez views Urban Outfitters as a company with potential earnings upside in fiscal year 2025. The analyst concluded that the risk/reward profile for Urban Outfitters shares is favorable at their current trading levels.
In other recent news, Urban Outfitters Inc (NASDAQ:URBN). reported record fourth-quarter sales of $1.6 billion, marking a 9% increase from the previous year. The company’s earnings per share (EPS) reached $1.04, surpassing analysts’ expectations of $0.94. Urban Outfitters also achieved full-year revenue of $5.6 billion, reflecting an 8% growth compared to the prior year. The company plans to open 58 new stores and close 19 in fiscal 2026, aiming for mid-single-digit sales growth. Urban Outfitters’ strategic focus on expanding its product lines and improving store productivity has contributed to its robust performance. Additionally, the company is targeting a 50-100 basis point improvement in gross margins for fiscal 2026. Analysts have noted Urban Outfitters’ strong financial performance and positive outlook, with firms like Bank of America and Citi showing interest in the company’s strategic initiatives.
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