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Analysts said they expect the company to beat second-quarter earnings estimates and provide strong guidance but believe the company’s risk/reward now looks balanced.
URBN will report earnings after the close on August 22. The retailer’s shares are down around 2.4% following the report, trading at approximately $35.55 premarket.
“We expect Anthro/FP will continue to show comp strength this year and that UO will improve sequentially in 2H. However, we believe the UO brand will be slower to turn around given fashion inconsistency (resulting in lower customer loyalty) and a tougher competitive landscape, ultimately limiting possible upside to EPS beyond what is already anticipated by the market,” wrote analysts.
“We note that a strong 2Q EPS and above-consensus 3Q guide may drive shares higher near-term, but possible upside beyond our $40 TP is more difficult to contemplate without a meaningful turn at UO (and historically, $40 is where URBN stock tops out),” they added.
