Shares of Urban Outfitters bolted higher in early trade Wednesday, after the retailer reported a strong third-quarter earnings beat late Tuesday. Citi upgraded the stock to a buy, and a handful of others boosted their 12-month price targets.
The parent of the Anthropologie and Free People chains and brands turned in diluted earnings of $1.10 a share, a 25% gain over a year ago. That surprised the consensus expectation for a modest decline to 85 cents. Revenue of $1.36 billion came in with a comfortable margin above the $1.34 billion consensus view.
Anthropologie accounted for more than 43% of the quarter's revenue, up 6.9% year over year. Free People revenue rose 10.3% to about 27% of the total. Urban Outfitters generated just over 22%, down more than 7% from a year ago.
Overall, the company reported comparable retail segment sales rose 1.5%. A statement from Chief Executive Richard Hayne said management was "optimistic about the outlook for holiday demand and believe total comparable could be similar to our third quarter results."
Citi upgrade the stock to buy, from neutral, hoisting its price target to 59, from 40. The target is nearly 48% above where share closed on Tuesday. The note pointed out that "for the first time in years, the Urban Outfitters brand is showing signs of a recovery with management guiding to a Q4 sequential comp improvement and margin recovery expected to continue into fiscal 2025," according to reporting from The Fly.
Barclays, Morgan Stanley and Wells Fargo all raised their targets on the stock to between 41 and 52. Barclays rates the shares at overweight. Wells Fargo and Morgan Stanley have equal weight ratings.
Urban Outfitters Stock Rallies Early
Shares of Urban Outfitters stock rallied more than 13% at Wednesday's open. That sent the stock well past resistance at its 200-day moving average and to its highest level since early August.
The stock has a solid EPS Rating of 98 from IBD, but its overall Composite Rating is a much weaker 69. Its Relative Strength rating is a very weak 47. The Relative Strength rating compares a stock's 12-month price performance to all other stocks. The RS rating and EPS Ratings are the two most heavily weighted elements that determine IBD's Composite Ratings.
IBD generally suggest growth stock investors look for stocks with a Composite Rating of 80 or higher.
