Piper Jaffray Remains Sidelined as a Review of Carter's (CRI) Shows Increased Risk

Piper Jaffray reiterated a Neutral rating on Carter's (NYSE: CRI), and raised the price target to $97.00 (from $96.00), following the company's 4Q earnings report. Piper Jaffray had been biased positively. However, following a more in depth review of the model, Piper sees an increased risk of persistently negative store comps, FX headwinds and the continued pace of store openings despite a meaningful shift toward e-com.

Analyst Stephanie Wissink commented, "We are maintaining our fair value view following CRI's report. We see secondary drivers of growth as intriguing but after spending time in the financial model and reflecting on the risks, our concerns around domestic unit growth were reinforced. We think a persistently negative store comp is likely; this, in tandem with strong e-com growth, suggests the channel shift is more pronounced. Future capital returns may be minimized in exchange for near term growth. The company's 2020 $4B target seems reasonable (+8% CAGR) if secondary drivers kick in, and assumes an acceleration from the current rate of business. We are adjusting our model downward on fundamentals, higher on share buyback, and given FY guidance is out of the way, we are raising our multiple by one turn to 17x FY17E EPS; our PT moves up from $96 to $97."

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 $99.44 yesterday.

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