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Burlington's Blockbuster Q3 Earns It A Higher Price Target From Citi

Citi expects Burlington Stores Inc BURL to report a similar results for the fourth quarter, a day after the retailer crushed expectations for its third quarter numbers, driven by higher margins and lower costs.

  • Burlington Stores Q3 EPS $0.51 vs $0.33 Est, Revenue $1.34B vs $1.32B Est
  • Burlington Stores Sees Q4 EPS $1.63 to $1.67 vs $1.69 Est

The brokerage projects another blow-out quarter from the company for the three-month period ending January. Citi’s call comes amid “what may seem like unimpressive guidance for 4Q.”

The company is targeting EPS growth of 16-18 percent in 2017, including wage pressures.

“Mgmt is typically conservative with its comp guidance, but more importantly we believe GM will be the source of upside again in 4Q, especially considering the improvements we have seen versus two years ago in each of the preceding qtrs,” analyst Paul Lejuez wrote in a note.

The retailer brought in better brands, developed newer categories such as home and beauty, and build smaller stores. Lejuez expects the trend to continue, particularly in the near-term with favorable traffic and conversion trends.

The strong third quarter results revived the shares, which has been weak after Spruce Point Capital Management published a short thesis report on the discount retailer chain. The report alleged that the company's management team is making use of "aggressive financial and accounting tactics to engineer beat and raise quarters."

Lejuez raised his F16/F17 estimate to $3.34/$3.99 from $3.06/$3.66 and sees fourth quarter comps of +4-5 percent, op margin of 13.1 percent (+190bps), and EPS of $1.88. The analyst, who has a Neutral rating on the stock, also raised his target price to $94 from $87.

DateFirmActionFromTo
Sep 2016GuggenheimInitiates Coverage onNeutral
Aug 2016MKM PartnersUpgradesNeutralBuy
Aug 2016CitigroupMaintainsNeutral

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