Why Urban Outfitters Stock Blasted Higher in December

A good showing during an important retail period and an analyst price target lift were the news items driving Urban Outfitters (NASDAQ: URBN) higher in December. The veteran apparel retailer saw its share price close the month at almost 13% higher, as investors were cheered by the latest headlines concerning the company.

A Black Friday outperformer, according to one researcher

Urban Outfitters did rather well during the unofficial Black Friday shopping holiday at the end of November. That, at least, is the evaluation of researcher BMO, which identified the retailer as one of the better performers in the sector during the period.

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According to reports, in a fresh analysis published at the start of December, BMO said Urban Outfitters and the high-end clothier Anthropologie delivered strong sales and brisk inventory turnover for the period. It also singled out cosmetics specialist Ulta Beauty for similar performance.

While Black Friday 2024 was generally considered a success, some retailers didn't do as well as the market might have expected. BMO flagged Tapestry and Capri Holdings' Michael Kors as being underperformers. It added that companies such as athletic wear purveyor Under Armour and exercise bike maker Peloton continued to work through turnaround programs to improve their businesses.

This was bolstered by another updated take on Urban Outfitters stock published in the middle of the month. Baird analyst Mark Altschwager raised his price target on the stock to $55 per share from $49. Although Altschwager maintained a neutral recommendation on the company, he pointed out several positive factors in the company's favor.

According to reports, the pundit believes the company's Free People brand, in addition to Anthropologie, did better than expected in the previous quarter, with solid momentum continuing into the early holiday season. While he's concerned that the flagship Urban Outfitters brand could use improvement on the top line, management is making progress in turning the situation around. He also said the company has a strong balance sheet.

Fourth-quarter results will tell the tale

Urban Outfitters has certainly done well of late, but it's important to bear in mind that the company has not yet provided details of the most important retail period of them all -- the holiday season. We should get a clear picture of this when management publishes its fourth-quarter results, which will likely occur in late February. Until then, it might be wise to be cautious about the stock following its recent bull run.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Peloton Interactive and Ulta Beauty. The Motley Fool recommends Tapestry and Under Armour. The Motley Fool has a disclosure policy.