Is Urban Outfitters About to Get Crushed?
Urban Outfitters watched its shares pull back on Tuesday after the retailer received a downgrade from Deutsche Bank.
Urban Outfitters Inc. (NASDAQ: URBN) watched its shares pull back on Tuesday after the retailer received a downgrade from Deutsche Bank. Although this stock has made great strides in just the past quarter, up 25%, Deutsche Bank’s Tiffany Kanaga believes that Urban Outfitters will be giving some of it back.
Since Urban Outfitters dipped in mid-August, the stock’s multiple has expanded about 3.5 turns, compared to consensus earnings for fiscal 2018. Deutsche Bank pointed out at this level the multiple sits above the three-year average and sharply defies the multiyear contraction trend.
As a result, Deutsche Bank downgraded Urban Outfitters to a Sell rating from Hold. The main driving force behind this downgrade is that the company has gained about 43% since mid-August, outperforming the S&P 500, which is only up 3%.
Keep in mind that the stock has dropped about 30% in the past 52 weeks. The stock has seen a similar performance looking back over the past five years.
[nativounit]
Same-store sales for September are expected soon, and third-quarter financial results are coming next month. These could act as catalysts and push the stock back down. Other similar retailers (L Brands, Zumiez and Buckle) are a reporting their September sales shortly as well, which could give a clearer picture of what to expect from Urban Outfitters.
[recirclink id=416777]
A few other analysts had this to say about Urban Outfitters:
- Jefferies has a Buy rating with a $25 price target.
- RBC has a Hold rating with a $21 price target.
- BMO Capital Markets has a Hold rating and a $20 target.
- SunTrust Banks has a Buy rating.
- Morgan Stanley has an Equal Weight rating with a $19 target.
- MKM Partners has a Sell rating and a $16 price target.
- Merrill Lynch has a Buy rating with a $22 price target.
- KeyCorp has a Buy rating with a $26 price target.
Shares of Urban Outfitters were last seen down about 4% at $22.95, with a consensus analyst price target of $21.11 and a 52-week trading range of $16.19 to $40.80.
[wallst_email_signup]
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
