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Urban Outfitters Soars Post Earnings on Analysts' Upgrades

Urban Outfitters surges after better-than-expected fiscal second-quarter earnings and surging digital sales spark a flurry of analyst upgrades.

Shares of clothing retail operator and eponymous chain Urban Outfitters  (URBN) - Get Urban Outfitters, Inc. Report jumped as much as 26% on Wednesday after the company reported better-than-expected fiscal second-quarter earnings and surging digital sales, sparking a flurry of analyst upgrades.

The Philadelphia-based company, which also operates Anthropologie, BHLDN, Free People and other brands, posted fiscal second-quarter earnings of $34 million, or 35 cents a share, well above analysts’ expectations of a loss of 40 cents a share.

Comparable retail segment sales declined by 13% during the quarter, though the company said that was more than offset by “double-digit digital sales growth.” Overall sales came in at $803 million, down 16.5% from a year ago but above analysts’ estimates of $672 million.

The better-than-expected results prompted a flurry of upgrades from analysts, who took a shine to the company’s Free People and e-commerce results as well as its overall positive performance amid what has become a have vs. have-not landscape for retailers amid the coronavirus pandemic and economic downturn. 

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Indeed, Urban Outfitters' results buck the trend among retailers like Neiman Marcus, Macy's (M) - Get Report, Lord & Taylor and Tailored Brands (TLRD) - Get Report, who have struggled to get consumers to open their pocketbooks through the pandemic, and in many cases have filed for bankruptcy protection.

Barclays analyst Adrienne Yih raised the firm's price target on Urban Outfitters to $26 from $18 and held her equal weight rating on the shares. Telsey Advisory analyst Dana Telsey upgraded her rating to outperform from market perform and lifted her one-year target to $30 from $24, while Loop Capital analyst Laura Champine upgraded her rating to hold from sell with a $24 price target.

Separately, shares of Nordstrom  (JWN) - Get Nordstrom, Inc. Report fell more than 6% in premarket trading on Wednesday after it posted a second-quarter loss of $255 million, or $1.62 a share, vs. net income of $141 million, or 90 cents a share, a year ago. Sales fell 53% to $1.86 billion vs. an expected $2.38 billion.

Shares of Urban Outfitters were up 22.6% at $25.50 in trading on Wednesday, while shares of Nordstrom rebounded at the opening bell, falling 0.64% to $15.42.