Burlington Stores Has Potential For Significant Margin Expansion - Piper Analyst Upgrades Stock

Piper Sandler analyst Edward Yruma upgraded Burlington Stores, Inc BURL to Overweight from Neutral, raising the price target to $240 from $155.

Yruma said he is increasingly confident in the 300+ bps margin expansion opportunity and believes that market share gains are likely to continue.

Per the analyst, department stores have remained highly conservative for 1H24 inventory buys, which creates a favorable environment for off-price to take continued share.

BURL presents the right combination of an improved store shopping experience and deep values that will help it continue to take market share, the analyst adds.

Per Yruma, the company’s five- year guidance of 3-4% comp growth looks achievable in a stable consumer environment.

BURL went through significant operational and cultural changes during 2022/2023. 

The analyst writes that much of the internal heavy lifting is complete and that BURL management can refocus on accelerating L-T growth. 

A targeted 300 bps improvement in EBIT margin (up from 5.3% in FY23E) looks achievable since this would merely return BURL back to 2018/2019 margin levels, the analyst notes.

The analyst expects FY23 revenue of $9.571 billion, with FY24 revenue of $10.431 billion.

Price Action: BURL shares are trading higher by 1.58% to $196.42 on the last check Wednesday.

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