Burlington Stores is the IBD Stock Of The Day for Friday. The off-price retailer received an upgrade Friday as shares trend toward a buy point.
UBS on Friday upgraded Burlington stock to buy from neutral, noting a solid consumer spending environment, major market share gains for department stores, and the company's self-help initiatives, The Fly reported. The firm believes BURL will be an outperformer over the next 12 months, driven by earnings beats and upward EPS revisions from analysts that will "keep the sentiment bullish."
UBS hiked its price target to 360 from 280. The target was 30% above where shares traded on Friday.
A report Tuesday from Bernstein said U.S. consumers are more optimistic on discretionary spending in 2025, following a difficult 2024 in which a widespread squeeze on middle and higher-income shoppers resulted in trade-downs. The firm has a positive view for stocks with exposure to high-income consumers and sportswear, which it views as key bright spots for stronger spending. Bernstein raised its price target on BURL stock to 380 from 340 and maintained an outperform rating.
Q3 Review
Meanwhile, Burlington is coming off a bit of a mixed Q3 report from late November. The retailer posted a 41% increase in adjusted earnings to match estimates. Total revenue rose about 11% to $2.53 billion, just short of forecasts for $2.55 billion.
CEO Michael O'Sullivan noted that third-quarter comparable-sales trends started out "very strongly" for the company's winter outerwear stronghold. But warmer weather starting in mid-September slowed sales momentum. However, comparable sales were up 4% during the quarter if cold weather categories, which represented 15% of sales for Q3, were excluded.
The comp growth is consistent with the trajectory Burlington has seen since March, O'Sullivan said, adding that the company is "very encouraged" by the underlying sales trend.
"The agility with which we operated during the quarter has left us in a strong inventory position, which has us well poised for the holiday season," O'Sullivan said earlier. At the time, he added that November was off to a good start, and that he was optimistic about prospects for the fourth quarter.
For Q4, FactSet expects about a 3% increase in earnings to $3.76 per share on 5.2% revenue growth to $3.28 billion.
The retailer averaged 73% earnings growth over the past three quarters, while revenue rose an average 11.7% during that period.
Burlington Stock
Burlington stock is trading in a seven-week flat base that formed as a base-on-base formation. The current pattern has an official buy point of 298.88.
The buy zone, which extends 5% beyond the buy point, stretches to 313.82.
Burlington Stores ranks fourth in the Retail-Apparel/Shoes/Accessories Group according to IBD Stock Checkup. Abercrombie & Fitch leads the group.
Burlington has a 92 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. BURL stock has a muscular 88 EPS Rating. Burlington's Relative Strength Line is at 52-week highs with an 89 RS Rating.
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