Carter's, Inc. (NYSE:CRI) faces a risk to margins as the promotional environment normalizes, according to Bofa Securities.
The Carter's Analyst: Christopher Nardone downgraded the rating for Carter's from Buy to Underperform, while reducing the price target from $120 to $82.
The Carter's Thesis: The company’s first-quarter results, scheduled to be reported on April 29, are not at risk, Nardone said in the downgrade note.
The analyst added, however, that the success of Carter's price hikes depends on peer behavior. He explained the company’s view “that it can raise price and maintain last year’s high level of full price selling through the year will be challenged as other retailers ramp discounts.”
Nardone also sees “2023E margin downside from rising cotton prices.” He reduced the earnings estimates for fiscal 2022 and 2023 by 7% to $8.30 per share and by 11% to $8.75 per share, respectively.
CRI Price Action: Shares of Carter's had declined by 0.89% to $85.87 at the time of publication Wednesday.
