The shares of Urban Outfitters (NASDAQ: URBN) surged today after the apparel retailer reported quarterly earnings that exceeded the expectations of Wall Street analysts.
The stock price of Urban Outfitters increased more than 16% to $32.69 per share. The company gained more than 43% in stock value year-to-date.
Urban Outfitters financial results
Yesterday, Urban Outfitters reported net income of $73 million or $0.61 in earnings per diluted share for the fourth quarter ended January 31, 2016. Wall Street analysts expected the apparel retailer to report earnings of $0.56 per share.
According to the company, its total quarterly net sales were $1.01 billion including $415 million for Urban Outfitters brand, $419.09 million for Anthropologie brand and $178.48 million for Free People brand.
Urban Outfitter CEO Richard A. Hayne said, “While apparel sales underperformed during the fourth quarter, I am pleased with the merchandise margin improvement delivered by the brands. Additionally, our expansion categories performed above our expectations and continue to give us confidence in our future growth opportunities,”
Analysts increase price target on Urban Outfitters
Several analysts covering the shares of Urban Outfitters increased their price target based on the fact that the company well managed the costs and improvement of the Anthropologie brand.
In a research note to investors, Baird analyst Mark Altschwager wrote, “We’re encouraged by several gross margin tailwinds, tighter cost management, and early signs of improvement at Anthropologie.” He increased his price target on the company’s stock from $29 to $35 per share.
Analysts at Guggenheim Securities and Jefferies were the most bullish as they raised their price target on URBN to $38 per share. BB&T Capital Markets analysts upgraded their price target on the stock to $36 per share while Piper Jaffray and Brean Capital to $35 per share.
FBR analyst Susan Anderson told Benzinga the quarterly financial performance of Urban Outfitters was “positive for specialty retail.” She added, “The trend this earnings season seems to be that spec retailers are doing a little bit better than expected QTD, likely driven by very favorable weather and easy compares to LY. So URBN is no outlier.”
On the other hand, MKM Partners analyst Roxanne Meyer commented that the company’s financial results showed “hints of Optimism and several tailwinds into 2016.” However, she remains in the “wait-and-see mode” due to the higher promotional activity early last month. She has a $31 per share price target on the stock.