Burlington Stores is the bank's "Specialty Retail top pick," with its positive potential for improved margins and strong inventory situation setting the company up for a strong fourth quarter.
The team of analysts also pointed to tariff-sourced retail disruption as a boon for Burlington sales. Only 6% of the company's products are directly imported, and not all of them are from China, according to the note. Burlington management is positioning the company to attract shoppers should competitors transfer tariff costs directly to consumers.
"The off price industry historically has benefited from retail disruption," the analysts wrote.
The team also praised Burlington's leaders for improving its inventory situation. Last year's holiday season saw the company face a product shortage during critical sales weeks. The company is likely to adjust its inventory count for upcoming holiday sales and improve its logistics accordingly, the note said.
"We think leaner overall inventory combined with products focused on strong holiday and winter categories will help improve 4Q sell-through," the analysts wrote.
The bank rates Burlington stock "buy" with a $225 per share price objective.