MKM Partners Remains Bullish on Burlington Stores (BURL) Ahead of 4Q
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MKM Partners reiterated a Buy rating on Burlington Stores (NYSE: BURL), and raised the price target to $99.00 (from $94.00), heading into the company's 4Q. MKM Partners' views EPS growth over the next three years continues to land in the 17-18% range, which overlaps with the targeted 16-18% range mentioned today, though includes $7M in higher wages for store employees and $7M in distribution center wages.
Analyst Roxanne Meyer commented, "At first blush, the 3.7% comp didn't appear all that robust vs. peers or on a 2 or 3 year stack vs. 2Q. However, the comp was up 6% excluding cold weather categories, which accounted for 10% of sales in 3Q and was a significant drag given warmer weather. Recall that in 4Q LY, cold weather items were a 4 point drag to the comp, representing a nice tailwind (should weather cooperate in 4Q...though coats were bought flat which should help). We continue to be encouraged that traffic is supporting comps, now up in the last eight of nine quarters, which is a positive for momentum into 4Q. Similar to ROST (Buy, $68.94, $73 PT), the West was cited as the strongest region, in part due to favorable weather, but based on our conversations, may be evidence of an improving local economy/impact of higher wages. Additionally, high growth categories such as home and beauty, where there has been significant investment, continue to drive results, with strength boding well for gift-giving into holiday. The gifting presentation was set one month earlier vs. LY, which should be a benefit."
Shares of Burlington Stores closed at $86.04 yesterday.
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