Understanding women is challenging, to say the least, but Urban Outfitters seems to have mastered it. The hip retailer has outperformed many other clothing stores over the past decade in nearly every key metric, and analysts think the trend is sustainable.
That's because Urban uses scientific data analysis to determine what styles will be trendy, as opposed to other fashion houses which rely on a chief designer's predictive instincts, said Credit Suisse's Omar Saad.
He added that Philadelphia-based Urban, which also owns Anthropologie and Free People, has the opportunity to at least double its U.S. footprint before it fully saturates its home market. He adds that it could grow significantly in international markets as well.
The stock has underperformed other retailers lately, but that may make it a better bargain. Urban trades at 18 times earnings estimates, while shares of rival Abercrombie & Fitch (ANF) are trading at more than 26 times earnings forecasts.
That leaves plenty of room for upside in Urban's shares. Saad anticipates shares to move up 20% to $45 per share in 2011.
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