Urban Outfitters, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Alexandra Straton from Morgan Stanley maintained a Buy rating on the stock and has a $91.00 price target.
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Alexandra Straton’s rating is based on Urban Outfitters’ strong fiscal third-quarter performance, which exceeded expectations in terms of earnings per share and sales growth. The company saw significant growth in its Urban Outfitters and Anthropologie segments, alongside reduced markdowns and improved occupancy leverage, contributing to its profitability. This performance has led to a slight upward revision in the company’s fiscal year earnings guidance, although the fourth-quarter outlook remains conservative due to anticipated consumer sensitivity to promotions.
Straton is optimistic about Urban Outfitters’ medium-term potential for earnings growth, driven by several factors including margin recapture, profitability improvements in its Nuuly segment, and potential tariff relief. These elements suggest a positive trajectory for earnings per share revisions, which could lead to a re-rating of the stock’s valuation. Applying a higher price-to-earnings ratio to future earnings estimates implies a significant potential upside in the stock price, reinforcing the Buy rating.
Straton covers the Consumer Cyclical sector, focusing on stocks such as On Holding AG, Bath & Body Works, and Tapestry. According to TipRanks, Straton has an average return of 3.3% and a 53.66% success rate on recommended stocks.
In another report released today, Bank of America Securities also reiterated a Buy rating on the stock with a $93.00 price target.