Urban Outfitters’ Growth Potential Driven by Nuuly’s Strategic Position and Margin Expansion Opportunities

Morgan Stanley analyst Alexandra Straton has maintained their bullish stance on URBN stock, giving a Buy rating yesterday.

Alexandra Straton has given her Buy rating due to a combination of factors that highlight Urban Outfitters’ potential for growth and margin expansion, particularly through its Nuuly segment. Straton notes that Nuuly is an underestimated driver of growth and profitability, with several potential revenue streams that could bolster Urban Outfitters’ topline growth. The business benefits from fixed cost leverage and automation opportunities, which are expected to support continued margin expansion.
Additionally, Nuuly’s success is attributed to its strategic position within the broader Urban Outfitters business, its proprietary technology platform, and its more casual product assortment. These elements not only enhance Nuuly’s performance but also provide advantages to Urban Outfitters’ sister brands. Overall, these insights contribute to Straton’s conviction in maintaining an Overweight rating and a price target of $77 for Urban Outfitters.

In another report released yesterday, Barclays also maintained a Buy rating on the stock with a $80.00 price target.

URBN’s price has also changed moderately for the past six months – from $51.770 to $69.170, which is a 33.61% increase.