Urban Outfitters: Holiday Outperformance, Brand Momentum, and Nuuly Growth Support Buy Rating Despite Near-Term Margin Pressure

Bank of America Securities analyst Lorraine Hutchinson reiterated a Buy rating on Urban Outfitters yesterday and set a price target of $93.00.

Lorraine Hutchinson has given his Buy rating due to a combination of factors that underscore Urban Outfitters’ solid operating momentum and attractive growth prospects. The company delivered a robust holiday performance with positive comparable sales across all three major brands, and management commentary points to continued strength, particularly at Free People and Anthropologie, which she views as among the strongest apparel concepts in the market. While recent softness at Anthropologie weighed on near‑term expectations, she believes the market is placing too much emphasis on this temporary slowdown, as the weakness was narrowly concentrated in accessories and in a specific holiday window, with encouraging signs from full‑price Spring product following the season.

Hutchinson also highlights the improving trajectory at the Urban Outfitters banner, where strong holiday results and better trends in North America and Europe support a more constructive outlook on sales and profitability. Management expects the UO brand to return to at least break-even in the near term, with further upside as the business recaptures margin through fewer markdowns and better cost leverage. In addition, she sees Nuuly as an incremental growth engine within the portfolio, enhancing the company’s long-term earnings potential. Despite modest downward revisions to forward EPS estimates due to higher promotions and a softer gross margin outlook in the short run, Hutchinson views the overall earnings power, margin opportunity, and current valuation as supportive of a Buy recommendation.

Hutchinson covers the Consumer Cyclical sector, focusing on stocks such as Nike, Lululemon Athletica, and Bath & Body Works. According to TipRanks, Hutchinson has an average return of 2.1% and a 52.90% success rate on recommended stocks.

In another report released today, TipRanks – Anthropic also reiterated a Buy rating on the stock with a $93.00 price target.