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Urban Outfitters, Inc. (NASDAQ:URBN) just released its latest third-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.8% to hit US$970m. Urban Outfitters also reported a statutory profit of US$0.78, which was an impressive 74% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Urban Outfitters from 19 analysts is for revenues of US$4.05b in 2022 which, if met, would be a solid 15% increase on its sales over the past 12 months. Earnings are expected to improve, with Urban Outfitters forecast to report a statutory profit of US$1.88 per share. In the lead-up to this report, the analysts had been modelling revenues of US$4.03b and earnings per share (EPS) of US$1.78 in 2022. So the consensus seems to have become somewhat more optimistic on Urban Outfitters' earnings potential following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 25% to US$31.28. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Urban Outfitters at US$37.00 per share, while the most bearish prices it at US$23.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Urban Outfitters shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Urban Outfitters' growth to accelerate, with the forecast 15% growth ranking favourably alongside historical growth of 2.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Urban Outfitters is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Urban Outfitters' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Urban Outfitters going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Urban Outfitters that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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