Needham on Carter's (CRI): 'we see potential for the stock to drift lower'

Needham analyst Tom Nikic reiterated a Hold rating on Carter's (NYSE: CRI)

The analyst comments "We are lowering estimates ahead of 3Q26 EPS (reporting date hasn't been announced yet, was 10/27 last year). We believe CRI had a challenging Q3, amid headwinds from soft demand, a declining birth rate, elevated inflation (gas/oil), and unfavorable weather. We believe these headwinds have offset most of the benefits that CRI is seeing from improved internal execution (better product, marketing, etc.) As a result, we believe Q3 EPS could fall short of expectations, as we now forecast EPS of $0.80 vs. guidance $0.85. We've lowered our FY26/27 EPS estimates to $3.03/$3.21 (from $3.10/$3.34). While valuation is not optically high (10x-11x P/E multiple), we see potential for the stock to drift lower if numbers do indeed move down post-earnings (a 9x P/E has usually been the stock's trough). Thus, we're cautious near-term on CRI shares."

For an analyst ratings summary and ratings history on Carter's click here. For more ratings news on Carter's click here.

Shares of Carter's closed at $32.75 yesterday.

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