Analysts Recommend Buying Shares Of This Off-Price Retailer

It is imperative that investors consider including Loop Capital's retail stock in their portfolios as macroeconomic uncertainty persists. Loop Capital believes this is a stock that can combat inflation.

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There has been an upgrade to the Burlington Stores shares from a hold rating to a buy one by an analyst in a note she sent to clients on Tuesday, saying the retail giant should be able to compete with its competitors by providing the availability of more premium brands at a lower price.

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Burlington's customers are likely to experience persistent inflation, and if the company improves the values and the brands offered in its stores, it will be able to gain market share in the future. As we see the clearance racks remain appropriately lean, it is now clear that better execution over the holiday season was not a fluke, and we continue to see better sell-through over the next few weeks as well.

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Burlington Stores' shares have gained 2% so far this year, which is a good start for the company. During the past year, the retail sector has suffered from shifting consumer spending patterns, sticky inflationary conditions, and inventory glutes, which have all affected the price action upward after a more than 30% plunge last year.

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However, Champine noted that the tides of change have shifted, with women's apparel and premium brands showing particularly strong inventory improvements compared with last year. The analyst raised the off-price retailer's price target by about 9%, or about $225 a share, based on Monday's close of $220, which would represent an increase of about 9%.

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During our March/April shop, we found mid-tier brands in stock, robust inventory, and notably better prices than we saw in a previous couple of months. Burlington uses new, simple signage to call out the entry-level price points of its products, and we believe that is exactly what today's consumers are looking for.

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Champine also raised the firm's consensus estimates for sales and earnings per share for the full year together with the upgrade and price target adjustment, anticipating growth in total sales of 13% for the full year.

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In addition, Burlington has the potential to outperform TJX and ROST in the coming year, and they have the potential to increase margins in the future, which lends a premium valuation to Burlington shares compared to them, and we see positive catalysts for the share price over the coming weeks and months.

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