A recent rally for Carter’s Inc. ( NYSE: CRI ) stock is due for a cooldown, according to Wedbush analyst Tom Nikic.
He explained that a nearly 30% rally from its November nadir sets the stock up for disappointment. Nikic termed the stock’s valuation as occupying no-man’s land, meaning “it is not cheap enough to be considered a value stock, and it doesn't fit the bill for growth investors either.”
”We are downgrading shares of CRI to Neutral from Outperform, as the stock has rallied past our price target and we see near-term risks to fundamentals,” Nikic explained. “The U.S. birth rate has inflected negatively (and the company didn't even perform very well when births were growing) and wholesale partners are planning inventories very cautiously.”
He maintained a $78 price target despite the step to the sideline. Shares of the Atlanta-based retailer marked a modest decline in premarket trading.
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Wedbush cuts Carter’s to Hold on valuation concerns