What Happened?
Shares of children’s apparel manufacturer Carter’s (NYSE: CRI) fell 2.3% in the afternoon session after Wall Street analysts signaled a bearish outlook for the company. The consensus price target among analysts is $24.60, which implies a potential 14.5% decline from the stock's recent price. This negative sentiment is driven by several underlying concerns. For instance, Carter's has experienced weak same-store sales trends over the past two years. Furthermore, sales estimates for the next twelve months are flat, suggesting a softer demand environment ahead. Analysts also point to waning returns on capital, indicating that the company's previous profit drivers may be losing effectiveness. The broader children's apparel market has also been affected by shifting consumer spending habits.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Carter's? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Carter’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 4.4% as it rose sympathy with other apparel retailers that reported strong quarterly results. The positive sentiment in the sector was sparked by department store chain Kohl's and teen clothing retailer Abercrombie & Fitch, both of which reported quarterly results that surpassed analysts' forecasts. Adding to the optimism, both companies also raised their full-year guidance, suggesting confidence in consumer spending on apparel. For instance, Abercrombie & Fitch cited robust demand for its Hollister brand's dresses and denim jeans. While there was no major news from Carter's, the upbeat reports from its peers likely created a positive spillover effect for the children's apparel company.
Carter's is down 47% since the beginning of the year, and at $28.54 per share, it is trading 59.8% below its 52-week high of $71.04 from September 2024. Investors who bought $1,000 worth of Carter’s shares 5 years ago would now be looking at an investment worth $356.26.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
