Urban Outfitters, Inc. (URBN)

roguetrader214 (< 20) Submitted: 4/11/07 11:05 PM : Start Price: $26.71 URBN Score: -10.56

Stock is richly valued at almost 40x LTM EPS and 4x prices to sales. That said valuation alone is not a good basis for a short. Why short this stock?





Well I reasons before this happened but this moved up to number one once it happened. Dick Hayne sold 4.5 million shares in late March...To put that in perspective if he thought the stock had a fair value of 35 he gave up $50 million dollars by selling now. He wasn't selling for financial need obvioulsy so he must have felt the stock was topping out...Despite what he tells share holders (ask Ken Lay).





UO stores have lost their mystique, Anthro as a concept doesn't work the 300 or so shoppers I've talked to said the stuff is overprced and poorly made. As Free People expands it will canabilze its wholesale business. Why do they need a fourth concept if concepts 1,2, & 3 have such rosy futures. Geographically OU & Anthro are already in the best markets and other retailers have started copying their style and are selling it cheaper. Not to mention URBN has lost street cred for stealing its designs as well...check out Urban Counterfitters.com. Aside from that the street is super-bullish on the name and that usually tells me everyone is betting on the greater fool theory...Don't get burned buying at the top. Comps for OU will be close to flat or negative, Anhtro will be slightly positive, and FP doesn't metter because its less than 1% of revenue. Comps for the first quarter could be helped by a strong tax refund season and better weather than a year ago...But if this thing hits 30 short all you can borrow.

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