Burlington Stores Will 'Continue To Win'

Burlington Stores Inc BURL's buoyant outlook for the second quarter has rubbed off on BMO Capital Markets, as the firm upwardly revised its second quarter and full year 2016 earnings per share estimate for the company.

Burlington announced debt repricing and simultaneously raised its second quarter guidance for the comps., adjusted EBITDA and adjusted earnings per share, although it preferred to wait until its second quarter results announcement to revisit its full year 2016 guidance.

Underlining its positive view on off price retailers, BMO said consumers are likely to gravitate towards the rare deals provided by these companies, making them attractive. The firm also feels that Burlington's upbeat outlook could reflect what is in store for peer TJX Companies TJX and to some extent Ross Stores ROST, which has exposure in the South and West. Those companies operate mainly in the Northeast and Midwest.

BMO analyst John Morris noted improvement in Burlington's product quality and pricing. The analyst sees the company benefiting from its lean inventory initiative and expects it to expand in the home and women's categories, where it has a relatively small presence relative to peers.

Accordingly, BMO raised its second quarter earnings estimate for Burlington to $0.30 from $0.24 per share. This compares to the company's revised guidance range of $0.28-$0.30 per share. BMO'S earnings per share estimate for 2016 is upwardly revised to $2.87 from $2.81 and that for 2017 is hiked to $3.22.

BMO held off on tinkering with its price target until seeing off the company's second quarter earnings release. Accordingly, BMO's rating and price target for Burlington was maintained at Outperform and $69.