Burlington Stores Inc BURL reported its second-quarter earnings significantly ahead of expectations, while many of its peers struggled during the quarter.
The company’s long-term outlook is positive and the off-price sector is poised to become “increasingly attractive” amid growing macro uncertainty, according to Wedbush.
The Analyst
Wedbush’s Jen Redding maintained a Neutral rating on Burlington Stores while raising the price target from $162 to $200.
The Thesis
Burlington Stores’ focus on the domestic market is a positive, with year-to-date trends supporting the expected rise in US discretionary spending, Redding said in the note.
The company reported its second-quarter EPS at $1.36, handsomely beating the consensus estimate of $1.14. The beat was driven mainly by better-than-expected revenue growth, which came in at 10.5% year-on-year versus the consensus expectation of 8.6%.
While same-store sales accelerated sequentially, while non-comp stores contributed $115 million in sales, Redding mentioned.
“We look for continued strength in beauty, and we see whitespace in ladies apparel as the category has taken positive steps recently and remains under-penetrated at BURL among peers,” the analyst wrote.
The US-China trade war is unlikely to have a significant impact on the company’s results going ahead, Redding said. In fact, he added that management views the increased tariffs as “an opportunistic merchandise buying opportunity.”
Price Action
Shares of Burlington Stores had risen slightly to $203.58 at the time of publishing Tuesday morning.
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