NEW YORK (TheStreet) --Shares of Urban Outfitters (URBN) were surging by 17.48% to $36.71 during on Wednesday afternoon, as the company reported better-than-expect 2016 second-quarter earnings after the close on Tuesday. The apparel retailer posted earnings of 66 cents per share on revenue of $890.6 million (a record for the company). Both, topping Wall Street's expectations of 55 cents on revenue of $885.6 million.
In light of the earnings results Evercore ISI has upgraded Urban Outfitters to "buy" from "neutral." The firm was impressed with Urban Outfitter's positioning in today's "digitally reshaped retail landscape."
Despite the strong earnings beat and the upgrade, Ritholtz Wealth Management CEO Josh Brown preached caution when analyzing the stock.
"This is a great niche retailer they have their ups and downs like every other company that's living and dying on fashion trends. When they nail it, and you're an investor in the shares, you get paid. When the miss a trend you get killed,"
Brown explained that this is not the kind of business he is interested in and will "very rarely" get involved with this type of stock.
Separately, TheStreet Ratings rates Urban Outfitters as a "Hold" with a ratings score of "C." The primary factors that have impacted TheStreet Ratings rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, TheStreet Ratings also finds weaknesses including deteriorating net income and a generally disappointing performance in the stock itself.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: URBN