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On Wednesday, Citi analyst Paul Lejuez increased the price target on Urban Outfitters, Inc. (NASDAQ:URBN) to $75 from the previous $54 while maintaining a Buy rating on the company’s shares. The adjustment comes ahead of the expected first-quarter earnings report for fiscal year 2025, which Urban Outfitters is set to release after market close on May 21. The stock, currently trading at $59.33, has shown remarkable momentum with a 52.75% return over the past six months. InvestingPro data reveals the company maintains a "GREAT" financial health score of 3.27, with 10+ additional exclusive insights available to subscribers.
Lejuez anticipates that Urban Outfitters will surpass first-quarter earnings per share (EPS) expectations, primarily due to stronger gross margins compared to consensus. The company’s current gross profit margin stands at 34.79%, while maintaining a P/E ratio of 13.68, suggesting reasonable valuation relative to earnings. He highlighted the potential for the Urban Outfitters brand to continue improving its full-price selling strategy in the first quarter, which could signal a recovery for the company. The analyst noted that Urban Outfitters has the opportunity to regain approximately $1.00 in EPS that was previously lost due to significant underperformance in recent years.
The Citi analyst also expressed confidence in the ability of Urban Outfitters’ other brands, Anthropologie and Free People, to outperform most retailers in the current market environment. He suggested that the revival of the Urban Outfitters brand could act as a tailwind for sales and gross margins in fiscal year 2025.
Despite the uncertainty surrounding tariffs and macroeconomic conditions, Lejuez predicted that management might suspend full-year guidance for fiscal year 2025. However, he expects them to provide a high-level outlook on possible outcomes for the second half of the year. Additionally, he anticipates that management will guide for mid-single-digit sales growth in the second quarter, with an implied EPS of $1.25 to $1.30, which is slightly below the consensus estimate of $1.34.
Lejuez concluded his remarks by pointing to the strong momentum across Urban Outfitters’ portfolio and the company’s substantial cash position, which represents 20% of its market capitalization of $5.5 billion. He believes that these factors contribute to a favorable risk/reward scenario for the company’s stock as investors look forward to the first-quarter earnings report. For deeper insights into URBN’s valuation and financial health, including comprehensive Fair Value analysis and exclusive ProTips, visit InvestingPro, where you’ll find detailed research reports and expert analysis.
In other recent news, Urban Outfitters has reported its earnings for the fiscal year ending January 31, 2025, providing investors with detailed insights into its financial performance. This disclosure follows a series of analyst evaluations and target adjustments. UBS analyst Jay Sole raised the price target for Urban Outfitters to $54 from $45, maintaining a Neutral rating due to observed positive sales trends and anticipated revenue growth of 8.0% for the first quarter. Meanwhile, UBS also maintained a $60 target after the company exceeded fourth-quarter earnings expectations, though market concerns about macroeconomic conditions have kept their rating steady.
Telsey Advisory Group increased its price target to $59, citing improved holiday sales and cost leverage, while maintaining a Market Perform rating. Citi analyst Paul Lejuez raised the price target to $65 and reiterated a Buy rating, highlighting a stronger-than-expected fourth-quarter EPS of $1.04, which surpassed consensus estimates. Lejuez also noted improvements in comparable store sales and expressed confidence in the company’s potential earnings upside in fiscal year 2025.
These developments reflect a cautiously optimistic outlook from analysts, with Urban Outfitters’ performance showing strength in brands like Anthropologie and Free People. Despite some challenges, the company is seen as having favorable prospects for future growth, contingent on sustaining positive sales trends and managing macroeconomic uncertainties.
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