Carter’s Financial Struggles and Strategic Shift Prompt Sell Rating

Carter’s (CRI – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Ike Boruchow from Wells Fargo maintained a Sell rating on the stock and has a $28.00 price target.

Ike Boruchow has given his Sell rating due to a combination of factors affecting Carter’s current financial standing and future prospects. The company has decided to significantly reduce its quarterly dividend by 70%, which indicates a need to reallocate resources towards strategic investments amidst a challenging macroeconomic environment. This decision reflects the company’s acknowledgment that its dividend was not aligned with its current profitability levels.
Additionally, Carter’s is facing mounting challenges, including higher tariff-related costs and declining margins, which further complicate its path to recovery. Despite efforts to implement a new pricing plan, the company has struggled to achieve positive comparable sales since 2019. With the newly appointed CEO Palladini at the helm, there is hope for a strategic turnaround, but the process will require time and careful navigation of structural issues. These factors collectively contribute to the Sell rating, as the company’s recovery story is expected to be a prolonged one.

Boruchow covers the Consumer Cyclical sector, focusing on stocks such as Signet Jewelers, Kontoor Brands, and Carter’s. According to TipRanks, Boruchow has an average return of 5.1% and a 47.90% success rate on recommended stocks.

In another report released yesterday, Bank of America Securities also maintained a Sell rating on the stock with a $30.00 price target.