Burlington Stores stock target raised by TD Cowen on strong Q2 results

TD Cowen has showed confidence in Burlington Stores (NYSE: NYSE:BURL) by increasing its price target on the company's stock to $288 from $279 while maintaining a Buy rating.

The adjustment follows Burlington's strong performance in the second quarter, which showcased notable growth in same-store sales, gross margin, and SG&A leverage.

The retail company, known for its off-price model, has been the subject of positive attention due to its recent financial outcomes. The analyst from TD Cowen highlighted that the company's guidance for the second half of the year appears conservative, suggesting that there might be room for further growth.

The optimism is reflected in the new price target, which is based on 29 times the forecasted FY25 earnings per share (EPS) and 15 times the enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).

Burlington's efforts in improving sourcing, supply chain, and merchandising have been recognized as key factors contributing to its progress. These initiatives are believed to potentially bolster margin expansion, surpassing the 9% EBIT margin achieved in FY19. The analyst forecasts a compound annual growth rate (CAGR) of 24% in EPS, indicating a strong upward trajectory for the company's profitability.

In other recent news, Burlington Stores has been the subject of numerous price target adjustments following its Q2 performance that surpassed earnings expectations. Telsey Advisory Group raised its target to $310, maintaining an Outperform rating.

The decision was influenced by Burlington's sales and margin growth in the second quarter, leading to an upward revision of its annual EPS forecast. Evercore ISI also increased their target price to $315, highlighting Burlington's updated earnings guidance and "Burlington 2.0" strategy.

Jefferies raised its price target to $315 following strong second-quarter results, while Morgan Stanley increased its target to $300. JPMorgan outdid them all, raising its target to $354.

These adjustments followed Burlington's Q2 earnings, with an adjusted earnings per share (EPS) of $1.24, surpassing the average analyst estimate of $0.96. The company reported a total sales growth of 13%, driven by new store openings and a 5% increase in comparable store sales.

Burlington Stores has revised its full-year 2024 adjusted EPS guidance upwards to $7.66-$7.96. The company also plans to open 100 net new stores this fiscal year and relocate around 30 existing stores. Despite potential challenges due to increased ocean freight costs, the retailer's strategic positioning and operational improvements are expected to bolster its performance in the competitive retail sector.

InvestingPro Insights

InvestingPro data illustrates that Burlington Stores (NYSE:BURL) is navigating the retail landscape with a notable market capitalization of $16.86 billion. The company's P/E ratio stands at 41.11, reflecting investor sentiment on its earnings capacity. Additionally, Burlington's PEG ratio, which measures the stock's price relative to its earnings growth, is currently at an attractive 0.62, suggesting that the stock may be undervalued based on its growth prospects.

InvestingPro Tips indicate that analysts are optimistic about Burlington's future, with 10 analysts having revised their earnings estimates upwards for the upcoming period. This is in line with the company's solid revenue growth of 12.65% over the last twelve months as of Q1 2023. Moreover, Burlington has demonstrated a high return over the last year, with a 66.68% price total return, highlighting the strong investor confidence in the company's performance.

For investors seeking more detailed analysis, there are additional InvestingPro Tips available for Burlington Stores, which can be found at https://www.investing.com/pro/BURL. These insights could provide a deeper understanding of Burlington's financial health and future prospects.

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