Urban Outfitters upped to Buy, Capri cut to Hold at Morgan Stanley
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In a sweeping review of apparel and consumer discretionary stocks, Morgan Stanley selected Urban Outfitters (NASDAQ:URBN) as an underappreciated pick.
In a note to clients on Tuesday, the bankâs analysts acknowledged that equity strategists at Morgan Stanley remain underweight consumer discretionary. The strategists see âoutsized room for both negative 2023 EPS revisions & valuation downsideâ amid macroeconomic uncertainty. However, the analysts on the consumer side argued that this does not mean the overall sector is without spots of opportunity. 
In terms of stocks with âsufficiently de-risked 2023 forecasts & reasonable and/or low valuationâ Bath & Body Works (BBWI), lululemon athletica (LULU), and Urban Outfitters (URBN) were picked out. 
âBBWI, LULU, & URBN stand out as the most attractive stocks one could own from here, in our view,â the team wrote. âOn the other hand, [Capri Holdings] (CPRI), [Nordstrom] (JWN), & [PVH Corp.] (PVH) appear least de-risked on the 2023 forecast front.â
The team added that TJX Companies (TJX) appears to screen defensively into the close of the year. In terms of rating changes, Urban Outfitters (URBN) was raised to a Buy-equivalent rating and saw its price target pushed to $41 from a prior $27. Meanwhile, Capri Holdings (CPRI) was cut to Hold-equivalent from Buy and had its price target trimmed to $40 from a prior $55.
Bath & Body Works (BBWI), TJX Companies (TJX), as well as lululemon (LULU) were kept at Overweight while a Sell-equivalent rating was kept in place on Nordstrom (JWN). Both The Gap (GPS) and PVH Corp. (PVH) were kept at Hold ratings alongside Capri. 
Urban Outfitters (URBN) shares rose 3.2% in premarket action while Capri Holdings (CPRI) slipped 1.47%.
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