Urban Outfitters Earnings: Momentum Continues Despite Industry Challenges; Shares Undervalued

Urban Outfitters overcame weakness in its namesake segment to post fiscal 2024 first-quarter results above our expectations. We expect to lift our $36 fair value estimate by a mid-single-digit percentage and view the shares as an attractive investment opportunity even after a low-double-digit percentage rally after the report. Although we rate Urban Outfitters as having no moat, we believe it has outperformed many others in a difficult environment for apparel retail, and its Anthropologie and Free People (including Movement) brands attract an upscale demographic. In addition, the firm has a clean balance sheet with about $5 per share in cash and investments and no long-term debt.