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Burlington Stores Stock Could Rise to $250 on Retail’s Woes

By Rich Duprey – May 29, 2020 at 9:04AM

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The off-price retailer can capitalize on a unique opportunity.

Burlington Stores (BURL 3.36%) suffered in the first quarter due to the COVID-19 pandemic. Sales at the deep discounter were cut in half because its stores were closed and it had no e-commerce strategy to speak of to offset the losses.

Wall Street, though, thinks Burlington will bounce back sharply because of the plight of the rest of the retail industry.

A woman looks through clothes on a rack.

Image source: Getty Images.

Making the best of a bad situation

Citi analyst Paul Lejuez raised his price target on the discounter to $250 from $205 per share, a 22% increase, because it is now presented with a target-rich buying opportunity.

The shutdown orders that essentially allowed only corporate giants like Walmart and Target to remain open, while forcing specialty retailers and department stores to close, ensured an excess of inventory at those stores will need to be dumped.

Also, a number of retailers went bankrupt during the pandemic and will either have to greatly reduce their footprint while reorganizing or will liquidate their merchandise. In either case, discounters like Burlington can swoop in to purchase merchandise that it can then sell for a profit in its stores.

Lejuez expects the entire off-price retail segment to do well, suggesting investors should also keep an eye on TJX and Ross Stores, but Thefly.com reports the analyst told clients in a note he expects Burlington to especially benefit because it may develop a lot of new relationships with vendors.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends The TJX Companies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Burlington Stores, Inc. Stock Quote
Burlington Stores, Inc.
BURL
$115.65 (3.36%) $3.76
Walmart Stock Quote
Walmart
WMT
$132.53 (2.18%) $2.83
Target Corporation Stock Quote
Target Corporation
TGT
$151.79 (2.29%) $3.40
Ross Stores, Inc. Stock Quote
Ross Stores, Inc.
ROST
$85.96 (2.00%) $1.69
The TJX Companies, Inc. Stock Quote
The TJX Companies, Inc.
TJX
$62.90 (1.26%) $0.78

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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