Urban Outfitters, Inc. (Nasdaq: URBN) operates more than 120 specialty retail stores under the Urban Outfitters, Anthropologie, and Free People brands, and also offers clothes via a wholesale division under the Free People label.
Analysts like the fact that URBN carries in-demand, self-expressive merchandise, with differentiated retail brands. Most analysts believe the company has achieved a retail gold star: a unique brand position in the ages 18-24 customer category. Moreover, a relatively high 50/50 private label/nation brand inventory lowers inventory risk.
Sales increased an impressive 23% in FY 2008, with analysts seeing a 20-25% rise in FY 2009. Operating costs are reasonable. The Reuters FY 2008/FY 2009 EPS consensus estimates for URBN are $0.90 to $1.15.
The risks? Analysts are keeping an eye on URBN's performance at opening new stores on-time, and the company's overall productivity levels.
The First Call mean rating for URBN is: Buy [28 firms]. Mean 2008 target: $31 [high: $35, low: $18].
Stock Analysis: Urban Outfitters is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from URBN's shares. Sell/Stop Loss if you were to purchase shares in this company: $17.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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