Burlington Shares Are "Expensive For A Reason": Analyst Sees Strong Growth Ahead

BMO Capital Markets analyst Simeon Siegel reiterated the Outperform rating on Burlington Stores, Inc. BURL, with a price target of $175.

Benefitting from the thematic push to off-price shopping, BURL has shown consistent sales growth driven by LSD comps and 4%-7% store growth, with management planning to expand under-penetrated categories, the analyst notes.

According to Siegel, the company is chasing sales via opportunistic buying and improving margins with fewer expenses and faster turns. 

BURL is expensive, but for a reason, and the analyst estimates strong top-and bottom-line growth ahead.

The analyst notes that BURL's GM-driven 3Q beat with a "solid start" to November helped lift shares materially following growing investor negative sentiment.

The main highlights for the FY23-FY28 outlook include sales growing LDDs on average annually, hitting ~$16 billion in revs in FY28 with 500 net new stores over the next five years.

The company is starting below its multi-year target with a ~2% FY24 comp guidance, suggesting the remaining years would need to tack on a further ~80bps of annual comp to hit a five-year average of ~5% comp. 

Following the Q3 results, the analyst lowered the FY23 EPS estimate to $5.68 from $5.71.

Price Action: BURL shares are trading higher by 4.035% to $171.71 on Wednesday.