Market Overview

Wedbush Sees Strong Trends Backing Discount Retail

Share:
Wedbush Sees Strong Trends Backing Discount Retail

Wedbush initiated coverage on three retailers, highlighting strong macro trends and business models that made it difficult for e-commerce rivals to replicate.

The Ratings

Wedbush analyst Jen Redding initiated coverage of Burlington Stores Inc (NYSE: BURL) at Outperform with a $175 price target.

Redding came out with Neutral ratings on both Ross Stores, Inc. (NASDAQ: ROST) and TJX Companies Inc (NYSE: TJX) with $90 and $100 price targets, respectively.

The Theses

There is “no end in sight in the run-up for off-price goods,” according to Redding, making the companies attractive growth stories.

There are three other key factors, in Redding’s view, supporting the discount retail sector:

  • E-commerce can’t replace the experience of bargain hunting customers enjoy.
  • E-commerce competitors must also replicate the diverse assortment of these three companies, requiring high sourcing and warehousing costs that make profitability difficult.
  • A strong dollar and other positive macro trends in the U.S. should drive spending in the consumer discretionary category.

With these factors common across the sector, why withhold Buy ratings from Ross and TJX?

The analyst believes Ross is a solid investment for those looking long-term, but is fairly valued at its current level.

TJX’s financials are “solid,” with enough cash being generated to buy back $2.5 billion to $3 billion of outstanding shares annually. There is limited visibility into international prospects at the moment, however, and reading “favor[s] investments with an exclusive U.S. focus.”

Price Action

Burlington was down by 1 percent at $150.75 at time of publication. Ross and TJX shares were faring slightly better, both down 0.4 percent.

Related Links:

Nordstrom Is A Bright Spot In Retail, UBS Says In Sector-Wide Initiation

Mid-Morning Market Update: Markets Mostly Higher; BlackBerry Beats Q1 Estimates

Latest Ratings for BURL

DateFirmActionFromTo
Sep 2019MaintainsOverweight
Sep 2019UpgradesSellNeutral
Sep 2019MaintainsOverweight

View More Analyst Ratings for BURL
View the Latest Analyst Ratings

Posted-In: Jen Redding WedbushAnalyst Color Price Target Initiation Top Stories Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (ROST + BURL)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LGIHBTIGReiterates65.0
NXSTBenchmarkMaintains150.0
ANIKFirst AnalysisDowngrades
HUNAlembic GlobalAssumes
POOLStephens & Co.Reiterates196.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Nike Receives Downgrade Ahead Of Q4 Print; Analyst Says 'Puma Hoops Worth Monitoring'

Russell 1000 ETFs To Increase In Health Care, Tech Exposure