Target prices revised
Urban Outfitters (URBN) reported its fiscal second quarter of 2019 results on August 21. It reported sales of $992.5 million and adjusted EPS of $0.84, which beat analysts’ consensus estimate of $979.9 million and $0.77, respectively. On a YoY (year-over-year) basis, sales were up 13.7% due to strength in all its three brands (Urban Outfitters, Anthropologie, and Free People) and its digital business.
After the quarterly announcement, several firms made changes to their target prices for the stock. On August 22, Suntrust Robinson bumped up its price target to $55 from $51. B. Riley raised its price target to $52 from the $42, and RBC upped its target to $54 from $46. Deutsche Bank raised its target to $39 from $35.
Analysts’ 12-month average target price for URBN stock is $51, which reflects a ~12.1% upside based on its stock price on August 22.
Of the 22 analysts covering URBN stock, 68% are recommending a “hold,” 27% are recommending a “buy,” and 5% are recommending a “sell.”
What analysts are saying about other apparel retailers
Of the 25 analysts covering Gap (GPS), 76% have recommended a “hold,” and 12% have recommended a “buy.” The 12-month average target price for the stock is $33.11, which reflects a 2.8% upside to the price on August 22.
For Abercrombie & Fitch (ANF), there are 16 analysts covering the stock. About 44% of them have recommended a “hold,” and 25% have recommended a “buy.” The 12-month average target price for Abercrombie & Fitch stock is $23, which reflects an 18% downside.
Of the 18 analysts covering American Eagle Outfitters (AEO), 50% have recommended a “hold,” and 44% have recommended a “buy.” The 12-month average target price for AEO stock is $25.13, which reflects a 12.6% downside.
Changes in PE valuation
On August 22, Urban Outfitters was trading at a 12-month forward PE ratio of 16.5x. Following the announcement of its second-quarter results, the PE valuation increased to 9.5%.
In contrast, Gap is trading at a 12-month forward PE ratio of ~11.7x. Abercrombie & Fitch and American Eagle Outfitters are trading at 12-month forward PE ratios of 29.3x and 18.3x, respectively.