Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Burlington Stores Downgraded at Cowen Based on Demand Fears

Stock Markets Jun 22, 2022 16:40
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Sam Boughedda

On Wednesday, Cowen analyst John Kernan downgraded Burlington Stores (NYSE:BURL) to Market Perform from Outperform.

Kernan also reduced the firm's price target on Burlington to $175 from $209, telling clients in a research note that sector inventory levels and the health of the low-income consumer are deteriorating, and legislation regarding imports from China could cause additional issues for the company. The analyst added that cost inflation in labor, supply chain, and raw materials are not factored into the consensus estimates for 120bps of EBIT margin expansion into FY24 and 34% EPS growth off 2022's base.

"Our data suggests roughly 43% of BURL shoppers are on some form of EBT (food stamps) while 38% of ROST consumers are on EBT. Our May '22 collaborative survey data (COVID-19 survey) showed 47% are cutting or expect to cut spend given higher prices, up sharply vs. 42% the prior month," wrote Kernan. "As we enter summer and Back to School season pressure is rising on the low income consumer, raw materials costs are making new highs and AUC for brands and retailers are likely to reach decade highs into 2023 while higher cost inventory sourced in 2022 flows off the balance sheet."

Given the uncertainty over the competitive environment for off-price retailers, sourcing/freight costs, and cyclical concerns regarding lower-income consumers, Cowen said it sees little upside to valuation multiples.

"Our $175 target is 22x FY23E EPS a discount to the 5-year average of 25x."

Burlington closed Wednesday's session down 3.6%.

Burlington Stores Downgraded at Cowen Based on Demand Fears
 

Related Articles

Don't Believe the Chanos Hype, Says Wells Fargo
Don't Believe the Chanos Hype, Says Wells Fargo By Investing.com - Jul 01, 2022

By Sam Boughedda After famed short-seller Jim Chanos said that he is raising more than $200 million to short REITs that own legacy data centers, Wells Fargo analyst Eric Luebchow...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email