Burlington Stores Is The Best Amazon-Proof, Off-Price Play In Retail

As Amazon.com, Inc. AMZN continues its ascent in the retail space, investors are almost desperately looking for sub-sectors that remain relatively immune and can even deliver growth. And, according to Wedbush analysts Morry Brown and Taryn Kuida, off-price retailers are among the few that offer such conditions.

Bullish Thesis, Argued

On Thursday, the firm initiated coverage of one of the leaders in this sub-segment, Burlington Stores Inc BURL, with an Outperform rating and $107 price target, arguing that:

1. The industry backdrop is pretty favorable, “as off-price is one of the few structural winners in retail,” given its ability to continue to attract in-store traffic and increase its market share versus digital channels. This could keep Burlington’s same store sales in the low to mid-single digits over the next few years, the experts calculated.
2. Burlington offers “a multi-year earnings growth story that encompasses all key line items across the P&L.”
3. The analysts see several near-term catalysts — including cold weather in December and shrink helping boost margins, and potential sales and EPS upside drivers for Q416. Thus, their EPS estimate of $1.77 stands $0.08 above the Street’s consensus.