Urban Outfitters Is One Of The Best-Positioned Softline Retailers, Says Bullish KeyBanc

Urban Outfitters, Inc. URBN reported fourth-quarter results Tuesday that initially sent shares tumbling lower by more than 10 percent. But investors could be misreading the retailer, as the bullish case for the stock hasn't been this strong in some time, according to KeyBanc.

The Analyst

KeyBanc Capital Markets' Edward Yruma maintains an Overweight rating on Urban Outfitters' stock with a price target raised from $36 to $45.

The Thesis

For the first time in five years, Urban Outfitters reported that all three of its brands posted positive comps, Yruma said in a Tuesday note. The company's momentum continued quarter-to-date, as comps are higher by a "very high single digit," Yruma said, quoting Urban Outfitters management.

"This fashion shift is taking hold and could augur a more favorable multiyear cycle for softlines," the analyst said. 

Urban Outfitters remains one of the best-positioned companies in softlines, Yruma said. He named multiple reasons to be bullish on the retailer:

• A strong e-commerce business.
• Differentiated products and brands.
• A reasonable fleet of 603 total stores.
• A growing wholesale opportunity, as evidenced by Anthropologie Home selling at Nordstrom.
• A "thoughtful" approach to international expansion.

Price Action

Shares of Urban Outfitters were jumping more than 3 percent to $38.16 midmorning Wednesday.

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