Urban Outfitters Earnings: Entering 2025 With Momentum After Big Holiday Season; Shares Fully Valued

No-moat Urban Outfitters’ fiscal 2025 fourth-quarter sales and profitability surpassed the forecast that we revised upward (on Jan. 14) after its holiday sales update. Moreover, while management’s fiscal 2026 sales growth guidance aligns with our 6% estimate, its outlook for 50-100 basis points’ improvement in its adjusted gross margin (from fiscal 2025’s 34.8%) implies that our estimate (34.5%) is too low. We expect to lift our $47 per share fair value estimate by a mid-single-digit percentage, but view its shares as fairly valued after a rise of more than 30% over the past three months.