NEW YORK (AP) -- Shares of Urban Outfitters Inc. recovered a bit on Thursday from a steep plunge the day before, when it was the biggest loser in the S&P 500 index following the abrupt resignation of its CEO.
A Wedbush analyst upgraded the clothing seller after Wednesday's 19 percent decline, saying shares were now attractively priced and the company's new CEO might help its fortunes.
Fueling Wednesday's decline was news late Tuesday that CEO Glen Senk had resigned to pursue another opportunity. He is being succeeded by Richard Hayne, Urban Outfitters' co-founder, chairman and president.
His changed raised doubts for some analysts about how fast a turnaround could happen at the company, which runs Anthropologie, Free People and its namesake stores. Net income has dropped and revenue growth slowed over the past four quarters, and the company had to discount merchandise heavily during the holiday season.
Jeff Black of Citi Investment Research said in a client note Wednesday that Hayne has been a "guiding presence" at Urban Outfitters, but he hasn't had a strong hand in day-to-day management. He cut the company to "Sell" from "Buy."
Wedbush's Betty Chen said that Hayne taking over as CEO could be good for Urban Outfitters, however, because his experience and influence might speed up improvements at the Philadelphia company.
She raised Urban Outfitters' rating to "Neutral" from "Underperform," despite reservations about its lingering "fashion mishaps" and too much merchandise on hand. She said the promotions in November and December helped clear out marked-down clothing, and she sees some early signs of improvement in the company's spring lines.
Chen boosted Urban Outfitters' price target to $25 from $22.
Shares gained 57 cents, or 2.4 percent, to $24.50 in afternoon trading. The stock has dropped 33 percent in the past 52 weeks.
There are no comments yet