Morgan Stanley cuts Burlington Stores stock target to $267

On Friday, Morgan Stanley (NYSE:MS) made a slight adjustment to the price target of Burlington Stores (NYSE:BURL), reducing it to $267 from $269, while maintaining an Overweight rating on the stock. The decision follows the company’s first-quarter results, which exceeded expectations and confirmed the full-year guidance, providing reassurance amidst concerns of potential withdrawals or reductions. Despite the positive outcome, Burlington Stores’ stock, currently valued at $14.35 billion by market cap, experienced a 5% decline today. InvestingPro data shows strong analyst consensus with 5 analysts recently revising earnings estimates upward, suggesting potential upside ahead.

The performance of Burlington Stores in the first quarter was stronger than anticipated, with revenue growth of 9.34% year-over-year, especially considering the market’s concerns over potential financial retractions. However, the commentary regarding second-quarter-to-date comparable sales in relation to peers, along with a more modest beat excluding one-time items, and a cautious tone from management, contributed to the stock’s downturn. With a beta of 1.7, InvestingPro analysis indicates the stock tends to be more volatile than the broader market - subscribers can access detailed volatility metrics and 8 additional key ProTips for deeper insights.

Morgan Stanley remains optimistic about Burlington Stores’ near-term earnings per share (EPS) revision potential and its prospects for long-term growth and margin expansion. This optimism is reflected in the firm’s continued Overweight rating, suggesting confidence in the company’s future performance despite the cautious market sentiment. The company maintains a healthy gross profit margin of 43.3%, and according to InvestingPro’s comprehensive analysis available in the Pro Research Report, the company’s financial health score is rated as FAIR, with particular strength in profitability metrics.

In his remarks, the analyst from Morgan Stanley highlighted the positive aspects of Burlington Stores’ recent financial results, stating, "1Q beat & reiterated FY guide a positive result against withdrawal/cut fears." The analyst also acknowledged the factors that have tempered the market’s reaction, including "2QTD comp commentary vs. peers, lesser 1Q beat ex-1x items, & cautious mgmt. tone."

Overall, the reduction in the price target to $267 is a minor tweak that aligns with the current market dynamics and the company’s recent performance. Morgan Stanley’s stance remains positive on Burlington Stores, with an expectation for continued earnings strength and growth opportunities ahead.

In other recent news, Burlington Stores reported its first-quarter 2025 financial results, highlighting an adjusted earnings per share (EPS) of $1.67, which exceeded the consensus estimate of $1.43. Despite a slight revenue miss, with $2.5 billion reported against a $2.52 billion forecast, the company’s strategic initiatives have been well-received by investors. Burlington’s management has maintained its full-year guidance, projecting adjusted EPS between $8.70 and $9.30, based on anticipated flat to 2% growth in same-store sales.

The company has also been active in expanding its footprint, opening seven new stores and acquiring 46 leases from Jo-Ann Fabrics. Analysts have reacted to these developments with Evercore ISI reducing its price target for Burlington Stores to $310 while maintaining an Outperform rating, and JPMorgan lowering its target to $280, retaining an Overweight rating. Both firms acknowledged Burlington’s strong earnings performance despite the challenges.

Burlington’s management expressed confidence in achieving its guidance, citing effective cost management and strategic pricing as key factors. The company is actively pursuing cost-saving measures to counteract tariff impacts, differentiating itself from competitors like Ross Stores (NASDAQ:ROST), which has withdrawn its full-year guidance. These recent developments underscore Burlington’s efforts to navigate a challenging retail environment while focusing on long-term growth strategies.

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