Buckle's (BKE) long-term earnings outlook likely faces less risk amid accelerating comparable-store sales and merchandise margin "resilience," UBS Securities said Tuesday.

The apparel and footwear retailer's Q3 comparable-store sales accelerated roughly 600 basis points and recently inflected to positive, UBS said in a note to clients. The company is expected to see "good" margin expansion potential in the long term due to its private brands growth, according to the note.

"Our previous thesis on BKE was predicated on earnings pressure due to weakening comp sales," UBS analysts Mauricio Serna and Jay Sole said. "However, recent monthly prints indicate BKE's comp sales have stabilized post several quarters of consistent declines."

The brokerage said Buckle is poised to benefit from its "bullish view" on the holiday season, easing category-related headwinds, and the company's recent investments in new stores.

UBS raised its fiscal 2024-2026 earnings per share estimates for the company by 4-6%, applying a higher multiple to account for reduced risk in the company's long-term growth outlook.

The brokerage now projects Buckle's adjusted diluted EPS at $3.70, $3.95, and $4.10 for 2024, 2025, and 2026, up from previous estimates of $3.55, $3.75, and $3.85, respectively.

UBS upgraded its rating on the Buckle stock to neutral from sell and increased its price target to $46 from $31.

Buckle shares were up 5.2% in recent trading.

Price: 47.48, Change: +2.34, Percent Change: +5.18