Investing.com -- Shares in Urban Outfitters (NASDAQ: URBN ) surged more than 18% in U.S. premarket trading Thursday after the fashion conglomerate delivered strong first-quarter results, posting double-digit sales growth and revenue increases across all core brands.

The strong print comes in contrast to peers citing softer demand amid economic uncertainty.

For the quarter ended April 30, net income rose to $108.3 million, or $1.16 per share, from $61.8 million, or 65 cents per share, in the prior-year period. The results came in well above analysts’ expectations of $78.2 million, or 82 cents per share, according to FactSet.

Revenue reached $1.33 billion, also ahead of the $1.29 billion consensus estimate.

Same-store sales rose 5% year-over-year. By brand, same-store sales climbed 7% at Anthropologie, 3% at Free People, and 2% at the Urban Outfitters banner.

In the wake of the report, JPMorgan upgraded Urban Outfitters to Overweight from Neutral, citing a strong first-quarter performance and what it sees as a multi-year earnings growth opportunity.

The bank also raised its price target for the stock to $78 from $63, reflecting improved margin expectations and a positive comp trajectory across brands.

Urban Outfitters’ gross margin expanded by 240 basis points year-over-year to 36.8%, also above Street expectations. Operating margin improved 305 basis points to 9.6%.

JPMorgan’s upgrade reflects optimism around what it calls a “5-pronged top/bottom-line growth flywheel,” supported by core strength at Anthropologie and Free People, growth potential for Nuuly and FP Movement, and turnaround efforts at Urban Outfitters under new brand leadership.

“The ‘E’—earnings—has multi-year upside,” the analysts said, referring to expectations that profits could continue rising above current forecasts over the coming years.

The company’s management said second-quarter-to-date trends show comparable sales tracking close to first-quarter levels, with Anthropologie and Urban Outfitters comps holding steady and Free People accelerating, helped by easier year-over-year comparisons.

For the full year, JPMorgan lifted its fiscal 2025 (FY25) EPS estimate to $5.04 from $4.80, ahead of the Street’s $4.51. FY26 EPS is projected at $5.93.

The bank noted room for upside in comps and margins, especially as markdown pressures ease and Nuuly continues to scale. The report also pointed to potential share buyback accretion, with $9 per share in cash and no debt on the balance sheet.

“We see potential upside to FY25 comps across all 3 brands,” the analysts wrote, estimating +6.7% growth, well ahead of the +2.8% Street consensus.

Gross margin expansion is also expected to be durable, supported by improvements in the Urban Outfitters business and continued leverage at Nuuly.

JPMorgan’s revised valuation implies roughly 13x FY26 earnings, which it notes is in line with the company’s three-year pre-pandemic average.