URBN’s Investments, Footage Growth To Limit Expense Leverage In 2H

Analysts at JP Morgan reiterate their "overweight" rating on Urban Outfitters Inc URBN. The target price for URBN is set to $38. JP Morgan mentions, “Within the quarter, comps were positive every month, the strongest in June followed by July. On a stacked basis, July was the strongest, indicating that trends actually accelerated toward quarter-end….While the company has historically been able to leverage occupancy on a 1-2% comp, the fact that URBN is opening 29 stores in 2H vs. 18 will lead to some added preopening costs pressure, primarily in Q3. Also, the company is making a number of investments in its international infrastructure this year, meaning that over the near term it will become incrementally difficult to attain operating leverage.” Analysts at JP Morgan reiterate their "neutral" rating on Aeropostale Inc ARO. The target price for ARO is set to $24. JP Morgan adds, “The bears that have been anxiously awaiting the demise of ARO’s 17-18% operating margins (probably the same one’s that have been awaiting BKE’s downfall) may have gotten an early Christmas present. The thesis that there should be some reversion to the mean heading into 2011 now seems to be playing out, and the stock has been absolutely pummeled over the past month (down 28% vs. group down 5%) as the combination of a weaker than expected July comp coupled with a Q3 outlook implying some material margin erosion has weighed on shares. To be fair, ARO had been the best performing stock in our space until recently and is still outperforming the group YTD (down 1% vs. group down 5%).” More Analyst Ratings here