Carter’s upgraded to Neutral from Sell at Citi

Citi analyst Paul Lejuez upgraded Carter’s (CRI) to Neutral from Sell with an unchanged price target of $50. The analyst believes the market now better accounts for the sales and margin pressures Carter’s will likely face in fiscal 2025. With the company losing considerable share in their U.S. direct-to-consumer channel to the to the lower-priced mass and online channels in recent years, management has begun reinvesting in price to drive DTC growth, which will likely pressure gross margin in fiscal 2025, the analyst tells investors in a research note. However, with the shares down 20% since the Q3 report and within 5% of the target price, Citi believes market expectations are much closer to its numbers, suggesting a more balanced risk/reward.